High Demand For Mortgage Brokers

by: Michael Sterios

The mortgage intermediary market is facing a potential recruitment crisis due to a lack of graduate mortgage brokers entering the industry. Unlike many other professions, such as accounting or banking, the mortgage industry does not have a structured recruitment process designed to attract new mortgage brokers.

At present, the industry is awash with mortgage brokers in their 40s or 50s who are nearing retirement and who have little interest in applying new directives from the Financial Services Authority or learning about new advancements in IT. Because of this, the mortgage intermediary industry is hungry for new talent to take their place.

Trainee mortgage brokers are required to complete a qualification such as the Cemap, but this is only necessary after they have decided to enter the industry. Once trainee mortgage brokers have completed the Cemap there is virtually no compulsory ongoing training required to continue working as a mortgage broker.

The ongoing training does exist, however it depends on the employer as to how much training their mortgage brokers will be required to complete in order to remain authorised. Despite this, training is not the issue. What the industry needs is a graduate program that will attract young and enthusiastic individuals in the first place and convince them to become mortgage brokers.

Industries such as accounting and law have graduate programs and recruitment drives that target students as early as high school to get them interested in working in their respective industries. The financial services industry, however, lacks such programs so most people who enter the industry do so after working in other fields.

Despite this, working as a mortgage broker can be a rewarding career with each day different from the last. Mortgage cases are rarely similar to each other these days as individuals are subjected to a wide range of salary and wage schemes from their jobs. Credit files also vary considerably between mortgage applicants and heavy adverse credit individuals can present mortgage brokers with challenging situations.

The buy-to-let industry has also grown considerably since the mid 1990s presenting mortgage brokers with the opportunity to arrange finance for investments as well as residential properties. Investing in overseas property has also grown in popularity recently and some mortgage brokers now offer services for this market.

As with all industries that experience skills shortages, mortgage brokers have the potential to earn excellent salaries and substantial commission payments. Remuneration levels vary with fully independent mortgage brokers working in a self-employment situation likely to earn more than their employed counterparts. This will mean, however, that they will need to have an existing client base because they will not be remunerated unless they arrange mortgages for their clients.

There are not only exceptional financial rewards on offer for mortgage brokers that are willing to put in the hard work, there are also intrinsic rewards such as helping people, for example, buy their first home.

If you are interested in becoming a mortgage broker contact the Chartered Insurance Institute (CII) or the Institute of Financial Services (IFS) to find out more about the qualifications on offer.

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Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

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Mortgage Brokers Banned From Cold Calling

by: Michael Sterios

Prior to 2004 there was little regulation for mortgage brokers conducting business in the UK. Anybody could call themselves a mortgage broker, regardless of whether or not they held the necessary qualifications, and they could source clients and conduct their businesses in any way they chose to.

However the Financial Services Authority introduced a strict regime of regulation on 31 October 2004. Mortgage brokers were forced to obtain industry approved qualifications and conduct their business in accordance with the FSA’s rules and regulations.

One rule that was introduced on that date eliminated the ability of mortgage brokers to source clients through cold calling. Cold calling involves phoning people at random without any prior consent given by the individuals. It is a technique that was used by many mortgage brokers to find new customers prior to the new rules coming into effect.

This meant that mortgage brokers who relied on cold calling to expand their customer base were forced to invent new ways of finding clients. Because of this, lead generation companies began to emerge that generate leads for mortgage brokers who do not have the ability to do it themselves.

The lead generation companies are mostly internet based and gather leads through websites. This type of business activity is mostly unregulated by the FSA as it is not the mortgage brokers themselves who are gathering the leads. Some rules do exist for lead generators including that they are required to advise visitors to their websites that they will be contacted by an independent mortgage broker. The leads must then be sold to an independent broker rather than a tied advisor.

Despite this, lead generation is not considered to be cold calling and would therefore not endure the wrath of the industry regulator with regards to the ban on this activity. Generating leads with the purpose of calling back the clients would be considered a “warm lead” rather than cold calling.

However, mortgage brokers and the general public should be aware that a minority of lead generation companies have used unscrupulous means to obtain data for potential mortgage customers and have sold it to mortgage brokers disguised as qualified leads. If you receive a phone call from a mortgage broker and you did not submit your details online for this purpose you should contact the authorities.

Mortgage brokers who buy such leads will then call the potential clients only to find that the leads are not genuine. This means that the mortgage broker has effectively made a cold call to that member of the public because they have not given prior approval for the mortgage broker to contact them. This is a potentially dangerous situation for a mortgage broker to find themselves in so all efforts should be made to stamp out this practise.

Mortgage brokers should be careful to ensure that any mortgage leads they purchase are genuine. There are several large lead resellers operating in the UK who have excellent methods for filtering out invalid leads. High quality lead resellers will also offer mortgage brokers refunds on all invalid leads.

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Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

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Advantages And Disadvantages Of Using A Mortgage Broker

by: Michael Sterios

When searching for a home loan, you will be faced with the decision of whether or not to use a mortgage broker. There are advantages and disadvantages to using a mortgage broker instead of applying for a home loan directly with a lender.

One of the main advantages is that independent mortgage brokers have access to, and knowledge of, the entire UK mortgage market. Mortgage brokers are able to advise which lenders will consider your case and which lenders and products are unsuitable based on your individual circumstances.

Mortgage brokers are also adept at sourcing mortgages for people with poor credit ratings. They will have access to many lenders who specialize in lending to people with adverse credit. If you are in this situation, you may find it futile to apply for a mortgage directly through a mainstream bank.

Another advantage of using a mortgage broker is that they will take care of a lot of the paperwork and chasing up of the lender for you. This can save you precious time and reduce stress. Mortgage brokers will often have points of contact with the various lenders they put business through. This can help improve the efficiency with which your mortgage case is dealt with.

Mortgage brokers can also have access to exclusive deals not available on the open market. This is a major advantage of using a mortgage broker as exclusive deals can be quite favorable to the borrower. Sometimes mortgage brokers are able to negotiate a better interest rate or lower application fees from the lender. This is rare, but it is not unheard of, particularly where a broker has a strong relationship with a particular lender.

While there are many advantages to using a mortgage broker, there are some disadvantages.

One of these includes the tendency for some unscrupulous brokers to show bias towards lenders that provide them with higher fees and commissions instead of recommending the most appropriate product for the borrower. Although they are not supposed to, the temptation to earn extra commissions can be too much for some brokers.

Also, the broker may not be as highly trained and experienced as you are lead to believe. While there are exam and training requirements, some mortgage brokers are simply not very good at their job. Additionally, not all brokers have access to a full panel of lenders, meaning that they may not be able to source mortgages from the entire market. These brokers are usually referred to as “tied advisors” and will need to make you aware of their status before conducting business with their clients.

Finally, some brokers charge hefty fees to their clients, particularly for difficult cases, usually relating to adverse credit. The fees can be costly and may be a deterrent to using a mortgage broker. Some brokers charge up to five percent of the balance of the loan as a fee for heavy adverse customers.

Whether or not to employ the services of a mortgage broker is a matter of personal preference and necessity.

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Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

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Information Only Mortgage Brokers

by: Michael Sterios

Independent mortgage brokers are generally regarded as an excellent source of advice when searching for the right mortgage to finance or remortgage a property. Independent mortgage brokers are not tied to advising clients to use particular lenders and home loan products. Instead, they have access to all mortgage lenders and products available on the market.

In addition to independent mortgage brokers, there are tied mortgage brokers. Tied brokers are similar to independent brokers however, instead of having access to all mortgages available on the market they only have access to products from a select panel of lenders.

Mortgage brokers who work within a bank or financial institution are generally known as mortgage advisors. This type of broker will only offer advice on the home loan products made available by the institution they work for. Mortgage advisors therefore offer advice on the most limited range of products out of the three different types of brokers.

Some mortgage brokers, however, do not offer independent or tied advice and therefore provide an “information only” service. Information only mortgage brokers do not help their customers decide upon which mortgage products are best suited to their individual circumstances or financial situation.

Instead, information only brokers will usually offer a wide selection of mortgage products and will perform the administration functions required to process the application after the customers have chosen the products by themselves.

While this may seem strange at first, the main advantage to the customer of such a service is that the customers are normally not charged a fee. Customers can therefore benefit from using information only mortgage brokers by saving money.

The main disadvantage, however, is that the customer may not select the most appropriate mortgage product for their individual situation. This can result in the customer paying more in interest and fees over the life of the loan than they would for a more suitable product.

Individuals who wish to use information only mortgage brokers should therefore have a good knowledge of the mortgage market in order to ensure they choose the right products for their individual needs. If they do not then they should consider paying for advice from an experienced broker.

Additionally, mortgage brokers sometimes have access to products that are not available on the open market. These are known as “exclusive deals” and each of these deals will normally only be available to the clients of a few selected mortgage brokers. Customers who use information only brokers may therefore miss out on such mortgage products.

In all, when deciding whether to use information only mortgage brokers, people must decide whether they need independent advice, whether they wish to have access to the entire mortgage market, whether cost is a factor, and whether they want to risk not being made aware of exclusive deals.

If cost is not important and people believe they can choose the right mortgages without independent advice, they may wish to use the services of information only mortgage brokers. There are several thousand brokers in the UK to choose from.

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Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

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Lenders vs Mortgage Brokers

by: Michael Sterios

When looking for a mortgage you may be faced with a decision as to whether you should use the services of a mortgage broker instead of applying for a home loan directly with a lender.

One of the main reasons why you should use a mortgage broker is that they have access to a much wider range of products than an individual lender does. Mortgage advisors who work within bank branches are tied to the products that the bank offers and cannot advise on products offered by other financial institutions. This means that tied advisors are not able to offer advice on the entire mortgage market and are therefore not independent and unbiased.

Instead those mortgage brokers are usually limited to about a dozen products, usually with varying interest rates, loan-to-value ratios, and fees. Apart from the variances in these factors, the products are mostly the same.

They will usually require the applicant to pass the same set of criteria, such as credit worthiness, in order to assess whether they are eligible for a loan. This normally means that applicants with adverse credit will not be approved and the lender will not assist them in locating a more suitable product.

Independent mortgage brokers, on the other hand, may have access to thousands of products from dozens of different lenders. This will certainly increase the odds of you finding a product to suit your individual circumstances, particularly if you are self-employed or do not have a perfect credit history.

An independent mortgage broker will have access to software that will be able to scour the entire UK mortgage market to find the best product available to suit your individual needs.

Many niche lenders specialize in providing mortgages for people who do not qualify for the products offered by mainstream lenders and they usually prefer to conduct their business through independent mortgage brokers. This means that you will not be able to access certain lenders without using the services of a mortgage broker.

Some larger mortgage brokers are even able to offer exclusive and semi-exclusive deals. These mortgages are not available on the open market which means it is always a good idea to contact at least one major mortgage broker to find out what they have to offer. Exclusive deals are usually only available for a limited time and target certain borrowers.

However if you are eligible for a prime mortgage product you may be able to secure the best deal directly from a lender. If you apply for a mortgage with a mainstream lender you will be able to save on mortgage broker fees as you will effectively cut out the middle man. Ordinarily you will be required to have a perfect credit file and some equity in your home or a large deposit.

Therefore, if you are looking to buy a home and need a mortgage, or if you are looking to remortgage a property you already own, you will need to asses the two options carefully and make a decision based upon your personal financial needs.

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Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

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Should I Use An Independent Financial Advisor

by: Michael Sterios

In recent times, Independent Financial Advisors (IFAs) have been used by many people as an alternative to mortgage brokers. The main reason for this is that there is a crossover between the services they offer.

IFAs and mortgage brokers usually receive their qualifications from the same few training institutions. These institutions include the IFS School of Finance and the Chartered Insurance Institute (CII). When a person receives their qualification as either a mortgage broker or financial advisor they only need to complete a reduced number of exams to receive the other qualification. This is one indication that mortgage advisors and IFAs undertake similar activities.

Because mortgage repayment costs account for the largest expense in a normal household, having the right product is seen as a necessary element to prudent financial planning. It is for this reason, more than anything else, that people have been turning to their financial advisor to source the right mortgage deal for their needs.

Many IFAs will have completed the qualifications and training necessary to become a mortgage broker and will be able to assist their clients in obtaining a home loan with ease. IFAs have access to the same software as mortgage brokers that can scan the entire UK mortgage market to ensure their clients receive impartial advice on their home loans.

Mortgage expenses are one of the most important factors to consider for a household budget. An IFA will be able to offer advice regarding whether to fix your interest rate in order to stabilize your budget or apply for a mortgage with a variable rate that may reduce over time. An IFA will also be able to help you prepare a financial plan taking into account your mortgage expenses throughout the term of the loan.

Mortgages are also interlinked with insurance. Interest only products will usually require some sort of insurance to cover the event of the mortgagor being unable to meet their obligations due to accident, sickness, or unemployment.

IFAs have an in-depth understanding of the insurance market and can therefore offer advice in such matters when a client applies for a mortgage with them. Many mortgage brokers also offer insurance products to their clients as an additional service which demonstrated the crossover from the mortgage broker’s point of view.

Even if your IFA does not offer a mortgage broking service, it is likely that they will be able to refer you to someone who they regularly put their clients’ business through. However they quite often do offer both services so if you already have an IFA and are looking for mortgage advice, it may not be necessary to seek out the services of a separate mortgage broker.

You may therefore decide to apply for your next mortgage through your existing IFA and keep all your financial affairs with the same entity. Alternatively, if you do decide to engage the services of a separate mortgage broker, you should ask your IFA for recommendations. That way, you may be able to co-ordinate your financial activities with both parties.

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Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

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The Equity Release Market

by: Michael Sterios

Equity release is a way for homeowners to release cash from the equity that has built up in their home. Equity can be defined as the difference between the value of a property and the balance of the mortgage, or any other finance, that is secured on it.

There are several different methods of equity release available to homeowners. This can include releasing all or part of the equity they have built up in their properties either as a lump sum, a drawdown facility, or as a steady cash flow over time. There are two main types of equity release plans – lifetime mortgages and home reversion schemes. Both of these schemes are only available to home owners who have built up a sizable amount of equity in their properties.

A lifetime mortgage is a form of equity release whereby a mortgage is secured against a person’s home after redeeming all other finance secured on it. The equity release can occur as either a lump sum, a drawdown, or as a regular income over time.

With this form of equity release, no interest is payable during the term of the lifetime mortgage. The interest payments will instead roll up into the balance of the loan. The balance of the loan is repayable when either the property is sold or the homeowner moves into long term care.

Home reversion schemes, on the other hand, are a type of equity release that requires the homeowner to sell all or part of their property to the scheme provider. The homeowner will them receive a lump sum payment as their equity release and will usually continue living in the property whilst paying a minimal amount of rent. When the property is eventually sold the reversion scheme provider will take their share of the proceeds and pay the balance to the homeowner or to their estate.

The equity release market is expected to grow considerably over the next few years. As more and more people become concerned that they have not saved enough money for retirement they are looking to their home as an asset that could potentially provide the funds required.

Homeowners have benefited from many years of above inflation growth rates in the property market and have therefore accumulated large sums of in their homes due to natural appreciation that they can put to use through an equity release scheme. Many homeowners have also paid of all or most of their mortgages, providing even more releasable equity. While this does build up personal wealth, it does not provide cash to pay for things unless the equity is released through one of the schemes detailed above or the house is sold.

Equity release schemes can have an impact on state benefits and inheritance tax. It is therefore a good idea to talk to an Independent Financial Adviser or mortgage adviser before entering into an equity release scheme. For mortgage advisers to provide advice on lifetime mortgages they must complete a special qualification. This helps to ensure that their clients receive expert advice on this topic as equity release is a serious action to undertake.

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Michael Sterios is a writer for http://www.ukmortgagesource.co.uk

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