Is a bank or mortgage broker better?
Either way, you'll typically use a mortgage broker, as banks employ mortgage brokers directly. So the real question is, should I use a bank or building society tied mortgage broker or an independent mortgage broker?
Whether you'd be more comfortable using an independent mortgage broker than directly to a lender to get your mortgage will come down to your individual needs and circ*mstances:
Your finances - Some people have a more limited choice of lenders willing to approve their application. This could be due to low income/affordability, poor credit score, less straightforward employment history, for example.
People in these circ*mstance will usually benefit from using an independent broker purely because they have access to a wider range of deals.
The type of property you want to buy and why - If you’re looking to buy a unique property, perhaps a non-standard construction property, listed building, or you want to build your own home, it can be more difficult to find a lender.
The majority of high street lenders prefer people to buy straightforward bricks and mortar houses that retain value well, so if that’s not your goal, a mortgage broker could be a better route.
How important it is to get the best deal available to you - If your major concern is simply getting a mortgage as quickly as possible, going to your own bank can be the quickest option for some people.
If you're keen to get the most competitive rates and terms for your circ*mstances, however, it’s probably best to look at the wider market. You could do so independently, but using a mortgage broker to compare deals is easier, quicker and likely more thorough.
Personal preference - Another consideration is simply your own preferences and the level of assistance you want or need.If you’re confident in your mortgage knowledge and like to control every step of the process, a mortgage broker may not be the right choice for you.
Mortgage brokers tend to take care of a lot of the negotiations between parties (i.e solicitors, vendors, the lender) as well as the application for you, so if you'd prefer to yourself, then going directly to a lender may be more suitable.
Get free expert advice from a broker at Mojo Mortgages, our award-winning partner
Who provides mortgages?
There are a few different types of mortgage lenders in the UK, and which is best suited to you depend on your needs. You might get your mortgage from:
A high street bank
Mainstream banks such as Santander, HSBC, NatWest, and Barclays that offer general banking services also offer mortgages. Some people prefer to approach their own bank when it comes to getting a mortgage.
However, it’s useful to know that already being a customer of a bank will not usually have any impact on the acceptance of your application.
A building society
Building societies offer similar services to a bank, but are often more flexible, as they are structured as a cooperative, so there is more focus on member needs. This means that they can sometimes offer preferable rates, or consider applicants/properties that a bank may deem too risky.
Some of the most popular building societies in the UK are Nationwide, Yorkshire, Skipton, Coventry and Leeds.
A specialist mortgage lender
Specialist lenders tend to focus purely on mortgage lending, and often cater to a specific type of borrower. For example, some offer mortgages purely to self-employed and contract workers, or people with bad credit.
Some specialist lenders only accept customers through what’s known as an intermediary (in other words, a broker) - and there will usually be a particular group of brokers that they work with.
A credit union
Credit unions are nonprofit, community-based organisations often used by people who are turned down for a traditional bank account. Mortgage lending through a credit union is not too common in the UK, but is more so in Northern Ireland than the mainland.
Usually you'll need to be a member of your local credit union for a minimum length of time before you could take out a mortgage with them. Their interest rates are typically less competitive, but they can be more flexible with financial difficulties, should you experience them.
Getting a mortgage from a bank
You can go directly to any type of mortgage lender to apply for a mortgage, it doesn’t have to be your own, or any bank.
This route can be quicker, and in some cases your own bank may reward customer loyalty by giving you a more competitive rate than non-customers.
However, any lender you select won’t necessarily have the best rates available to you, even your own bank. It’s important to compare mortgages before selecting a lender directly, as they'll only be able to offer you the best option from their own range.
Advantages of getting your mortgages from a bank
The application process can be shorter and slightly simpler with your own bank or building society, as your income is easier to assess
There are no broker fees when you go directly to the lender
Sometimes your own bank may offer you preferential rates for being a customer
It’s easier to set up an offset mortgage, if that’s something your bank offers, given that you already have an account with them
You can ask the lender questions directly as there is no ‘middleman’ - i.e broker
Disadvantages of getting your mortgages from a bank
Your choice will be limited to the products in their range, which may not offer the terms or mortgage interest rates you're looking for
Not all lenders accept all types of applicants. Approaching a random lender without knowing if you meet their criteria can lead to being declined, which can affect your credit score, and impact future applications
You won’t get totally impartial advice directly from a lender, as their goal is to sell you a mortgage from their own range
Some people may struggle to manage the personal communications between solicitors, estate agents and the lender alongside a busy career and/or family life without the help of a dedicated mortgage broker
Comparing mortgages online can be very time consuming and there’s a chance you’ll miss out on certain offers. Internet rates tables and comparison tools aren’t able to take your individual circ*mstances into account and some promote sponsored products that won’t necessarily be the best for you
Do I need a mortgage broker?
Given what you've read so far, really only you can answer this question. We would certainly recommend a mortgage broker, especially whole-of-market brokers like our partner, Mojo Mortgages. Here's why:
They have good working relationships with banks, building societies and specialist mortgage lenders, meaning they can assess your circ*mstances and immediately know which has criteria that will suit your circ*mstances.
Brokers also generally provide more detailed advice than a lender, which can be particularly helpful for first-time buyers. According to the latest UK first-time buyer statistics, there were 874,000 recent first-time buyers in England alone in 2022-23. They usually also provide more services, such as completing the application and managing communications on your behalf.
Advantages of getting your mortgages from a broker
As mortgage brokers deal with different lenders’ criteria on a daily basis, they know which lenders you should avoid and can discourage you from applying if you’re likely to get declined. This helps to keep your credit score intact, not to mention saving you wasted time and potentially wasted money
Brokers are impartial, whereas a lender that you approach directly will be focused on selling you one of their own products
Mortgage brokers can help complete your application, the associated paperwork and the ongoing communication that is necessary throughout your mortgage application
Brokers have existing relationships with lenders and can sometime sway a borderline application in your favour
If you’re an expat, older borrower, self-employed, have bad credit, or are looking to buy a property that many lenders will shy away from, a mortgage broker may be able to help you find a lender that you wouldn’t be able to access by yourself
Mortgages can be complicated and the industry is renowned for using jargon. Speaking to a broker can give you a better understanding of what you’re taking on and how to get the best out of your mortgage
Using a mortgage broker to compare deals on the market can save you a lot of time compared to doing this yourself. They have knowledge of the most recent rates and products readily available, whereas websites can be out of date
Some brokers can negotiate deals that are not available to the public, and in fact, some lenders are only available through a broker
Many mortgage brokers are also able to advise on relevant insurance products to support your mortgage
If you’re not able to get a mortgage in your current circ*mstances, they can provide advice about how to prepare your credit file and general finances for a successful future application
Disadvantages of getting your mortgages from a broker
The major disadvantage of a mortgage broker is the additional fees involved. Most brokers will charge a fee, although some take their fee from the lender, rather than the customer, so it’s a good idea to understand what the payment structure is before selecting the right broker for you
It can take a bit longer to get to the application stage when going through a broker, because they search the market for the best deal for you, rather than putting an application in straight away
Get free expert advice from a broker at Mojo Mortgages, our award-winning partner
How to get the best mortgage deal for me
The interest rate is the most important factor when comparing mortgages, but always look at the APRC (annual percentage rate of charge) to get a better idea of the overall cost. The APRC must legally be shown by all lenders, and takes into account the fees involved with taking out a mortgage, as well as the interest charges over the mortgage term.
That said, it’s fairly unusual to take out a mortgage and stay on the same product for the full term, which is typically 30 years in the UK. Most people take advantage of a lower initial rate, and then remortgage when it ends to ensure they keep the lowest interest rate available to them.
According to UK remortgage statistics 2024, just over half (57%) of UK households have a mortgage that is up for renewal this year. This equates to roughly 1.4 million households who will need to seek a better new with their lender in the next 12 months, or face the prospect of switching to their lender's standard variable rate (SVR).
When it comes down to finding the best mortgage deal for you, whether you use a bank or mortgage broker will depend on your personal circ*mstances and preference. Either way, it’s always best to compare deals across the market, rather than just opting for the first lender you find.
