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I am currently sourcing my first BTL mortgage. I have a good salary of 50K and a good credit history etc. I spoke with a mortgage broker who I liked but said she charges £300-400 per product. I know I can do a mortgage search on moneysupermarket or similar and get a load of mortgage options with no additional charge.
Question: What are the benefits of using a mortgage broker for this additional cost?
I want to expand my portfolio quite quickly from 3 up to 8 BTLs
No benefit if its a straightforward BTL do your own research then use a free broker like Mojo Mortgages they get their fees from the lender not from you
Agree with this - beware of many incompetent sharks out there (speak from personal experience) - try and avoid them if the scenario is simple.
A good broker is worth their weight in gold imho. They will find a product suited to you and your property. Those that pay for professional advice (which is tax deductible) will almost certainly grow a stronger portfolio and probably grow more quickly as well.Your broker knows about new products that you may not even be aware exist - a product that could help you move forwards and/or re-cycle your cash. A good example is the Precise Bridge to Term product. These kind of products don't hang around and there is a limited window of opportunity to access them. These products are so powerful, that some might even consider finding a property that fits the product!Back in 2006, thanks to my broker, I was informed about a product that offered a 10% gifted deposit. I purchased a 4 bed down house in High Wycombe where I negotiated a 10% discount and stamp duty paid. I then used this product to do a legitimate "no money down deal". These products obviously do not exist any more, but lenders are coming with innovative products all the time that can help you move forwards and only a "whole of market" broker will be aware of these.There are also lenders with some excellent products which can only be accessed via a broker - Shawbrook Bank for instance. So a broker can be an access point for products that you cannot apply for without using an intermediary.Coincidentally, we recorded a whole tranche of videos today with investment commentator Graham Rowan for our upcoming "Investment Fundamentals" week, and one of the things Graham mentioned was paying for professional advice as being a vital part of the mindset of someone looking to create significant wealth.But if you go for the free service, all of the above benefits will pass you by imho.
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
I have used a broker in the past when I had more complex issues such as a cash purchase that i wanted to refurb and finance within 6 months, they arranged a mortgage via a relationship manager that I could complete on within 3 months of the cash purchase and at s higher valuation.
However I generally just sort my own out for standard BTL and save the 300 quid, I also find brokers can slow down the application whereas direct with the lender the application tends to be turned around in 24 hours
Slowly working towards financial freedom
Good point - the one that I used took 5 months to arrange the mortgage - it only got done cause we intervened and reached out to the lender directly.
Good morning and congratulations on getting organised to purchase your first buy to let property a very exciting time .If you’ve got a broker who is looking to charge a fee then in my opinion that is unnecessary these brokers get paid by the lender a commission
What you need to be looking for is a broker that won’t charge a fee and one that has the whole market to go to so not restricted in anyway in helping to get you the best deal .
I speak from confidence on this matter as, along with my numerous property companies, I do own a mortgage brokers.
I tried to do it myself and didn't know about a deal that saved me £1k per month from a lender I wouldn't have thought to use before.
I tried 2x different lenders and nearly got put into a deal that would have cost me a lot more, so once again the broker saved the day as if they're an IFA they will have access to all lenders,
You can review deals via websites such as nlamortgages then just go direct, but a broker can save you the research time.
Like I said before they can be useful but I haven't seen any advantages unless you are trying to do something complex.
Whole of market is an interesting one as I'm sure there are some lenders that you can only deal with direct.
Your situation is totally straightforward, I don't think you need a broker. Go to money supermarket.com to compare deals.
A broker is really only worth their fees if you need an out of the box solution.
I totally agree with Vanessa, not only are they worth their weight in gold but a good mortgage broker can save you more hassle and money than the fee they intend to charge.
Not only will they know all the best deals out there but they will also know all the lenders criteria and that can be the killer to any portfolio builder. Criteria is the rules that a particular lender operates by, such as:
Not having knowledge of this information can lead you to make unsuccessful applications which will further damage your ability to access the market leading rates and deals you should have been able to access. Remember a failed mortgage attempt sits on your credit file like a bad coffee stain!
Any type of financial advice is specialised and to try and do it yourself is likely to cost you more money than you are trying to save.
I retired as a financial adviser a few years ago but I still happily use a mortgage broker as they are current and know all they need to know to help me. Just so you know during my time I lent in excess of £35,000,000 per annum, so I knew the market better than most but would still use a broker.
Landlord with 25 years’ experience in the property market and a specialist in tenant referencing, ID and credit screening. Creator of identity, credit and anti-money laundering system ValidID.co.uk