Property Investment Mortgages

All mortgage advisers must hold an industry-recognised qualification

Broker: n. A person who acts as an agent or intermediary in negotiating contracts, buying and selling, etc in return for a fee or commission v: act as a broker (for)

Which Type Of BROKER Is Right For You?
Mortgage BROKERS help you through the minefield of mortgages whether you need a buy to let product, have bad credit, need a self certification mortgage, are a first time buyer or simply need mortgage advice. Their job is to basically find the best mortgage deal and mortgage rate for their clients needs, complete all paperwork and manage the application through to completion of the deal.

The mortgage maze can be a difficult one to navigate and seeking unbiased mortgage advice is often the easiest way to understand the options available.

There is more than one way of classifying BROKERS. The Financial Services Authority (FSA) list various classes of BROKER dependant upon independence and fee structure. These definitions are currently under review as part of the FSA's Retail Distribution Review (RDR) and will be updated if there are any changes.

Mortgage IFAs (independent financial advisers) who have access to the whole of mortgages on the market (as well as other areas of financial advice) and give you the choice of paying by fee if you prefer
Independent Mortgage Advisers who offer products from the whole of the market as well as giving you the choice of paying by fee
Mortgage Brokers who offer products from the whole mortgage market but are paid via a commission

It is probably more important from an Investors point of view to choose their BROKER based on the amount of suitable products offered.

BROKERS can then be classified by whether they are tied to a particular lender of not

INDEPENDENT FINANCIAL ADVISER:
A BROKER of this type can offer products from the whole of the market with no tie-ins to any providers or panels of providers. They research the whole of the market and recommend the most appropriate deal according to the individual Investors circumstances. IFAs work on behalf of the Investor and will charge on a fee basis or a combination of fees and commission.

MULTI-TIED ADVISERS:
This type of BROKER is able to recommend a range of products from a limited number of providers. Only the products of those providers who the BROKER is tied to are available to the end client. It is important to bear in mind that you will need to check the amount of products and providers on offer before deciding if the limited choice available is suitable for your needs.

TIED ADVISERS:
A tied BROKER can only advise on the products of one provider. If you have a good relationship with your bank, you may feel comfortable dealing with that sole provider for the majority of your financial requirements. This will however, limit the number of products available to just that bank and you may be missing out on a better product available through another provider.

As a side note; it is worth mentioning that only an Independent Financial Adviser or Independent Mortgage Adviser has to offer a choice of paying by fee. By offering a fee option the adviser / BROKER can call themselves independent – the term independent does not refer to whether the adviser has access to all the products in the market place.

The cost for a BROKER varies quite a lot. A High Street Agent may even be free as they are more likely to be tied to a group of providers and so are paid via Commission

A commission-based payment is probably the most common form of remuneration for BROKERS providing mortgage advice. The BROKER is paid directly by the product provider. The cost of this commission paid out by the provider will normally be factored into the price of the product or the interest rate offered. These commissions vary with different products and providers but will be documented on the Key Facts Illustration (KFI) that the provider should send out.

A specialist BTL BROKER will probably charge a set FEE
(as well as claiming their commission)

Paying an adviser a set fee is generally more common with investment products especially mortgages. The fee can be in the form of an hourly rate, a set fee for the whole job or a percentage of the property value. Expect to pay anywhere in the region of £300 – £1000 as a set fee or as a percentage charge example, a 1% fee on a £70000 mortgage would equate to a £700 fee. If you use the same BROKER over and over again, it is possible to negotiate discounts in fees.

All mortgage advisers must hold an industry-recognised qualification

There are several qualifications available to mortgage BROKERS that meet the Financial Services Authority’s (FSA) standardss, such as:

Chartered Insurance Institute (CII) Certificate in Mortgage Advice (Cert MA)
The ifs School of Finance Certificate in Mortgage Advice and Practice (CeMAP)
The Mortgage Advice and Practice Certificate (MAPC) from the Chartered Institute of Bankers in Scotland (CIOBS).

There are other specific qualifications that mortgage BROKERS can gain, depending on their area of specialism; including equity release lifetime mortgages for example.

All BROKERS that give mortgage advice MUST to be authorised
and regulated by the FSA.

Regulated firms are placed on the FSA register and have to meet the regulators rules and regulations. The FSA register can be used as a checklist as all regulated firms have an FSA number allocated to them.

Did you know? The word BROKER originates from the Anglo-Norman ‘brocour’ which refers to the middleman in transactions and is first found in Middle English in 1355.

I doubt any BROKER would turn down a gift and this may be justifiable from an etymological point of view because the word BROKER may be connected through its Anglo-Norman source, with the Spanish word ‘alboroque’, meaning "ceremony or ceremonial gift after the conclusion of a business deal."!