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Do I Have to Use My Estate Agent’s Mortgage Broker?

At Boon Brokers, we take time to understand the needs and priorities of our clients and we conduct regular research to help develop our understanding. We recently surveyed a nationally representative sample of almost 2,000 UK mortgage holders to find out the concerns and questions homebuyers have when they are going through the buying process.

One of the key findings from our survey was that almost half of homeowners used a mortgage broker recommended by their estate agent and 37% of them said they felt pressured by the estate agent to do so. There was also a false belief that using a broker recommended by the agent would give them preferential treatment, to help ensure they get the property they want.

Another interesting trend was revealed; younger homebuyers were more likely to use the estate agent’s recommended mortgage broker, with 74% of homebuyers aged 18-24 doing so, compared to the age groups 25-34 (52%), 35-44 (46%), 55-64 (48%) and 65+ (30%). So, it looks like younger buyers with potentially less experience and knowledge about the mortgage process were more likely to be pressured into using the estate agent’s affiliated mortgage broker or were unaware that they had alternative options.

Couple comparing mortgage brokers

Do I have to use the estate agent’s mortgage advisor?

The short answer is no, you are under no obligation to use the estate agent’s mortgage advisor and you have the freedom to choose any advisor you want to work with.

It is legal for an estate agent to recommend a broker, but it is illegal to insist that you use them. The Estate Agent Act 1979 outlines that every offer the agent receives must be put forward to the seller, even if the offer is from someone with a mortgage that has not been recommended.

Estate agents will often ask you to use their broker because there are a number of benefits to them for doing this. They usually get paid commission for the referral to the broker and agents will often have targets related to the number of customer introductions they make each month.

This can lead to estate agents seeming pushy about using their in-house broker but although there are lots of benefits for them to do this, the buyer will not get preferential treatment for using the agent’s mortgage broker. Before agreeing to use any mortgage broker, you should compare the service with at least one other broker, to work out which broker offers the best service for your requirements.

Different mortgage brokers can offer varying levels of service, with some brokers doing a lot of the admin work on your behalf, saving you time and getting your house purchase processed with less hassle. Other mortgage brokers may do the bare minimum and they can also be a lot slower to complete work or are difficult to get hold of when you need an update. This is why it is important to choose a broker that has a good reputation by checking online reviews and customer testimonials.

Benefits of using an independent mortgage broker

Using an independent mortgage broker will ensure there is no bias in relation to the deal that they find for you. An independent mortgage broker will find the mortgage deal that best suits your specific situation, based on the information you provide them with, rather than the in-house broker who will be recommending a mortgage that benefits them. An in-house broker will also be looking after the interests of the person selling the property and trying to ensure the sales targets are hit for their company.

A good quality mortgage broker will have no bias regarding the deal that they recommend to their clients, finding the deal that is most suitable based on the financial situation and personal circumstances of the specific applicant.

Couple with mortgage broker

Many independent mortgage brokers will also have whole-of-market access, which means they will be able to choose the best deal from every single one available on the market. Many estate agents’ brokers will only work with one lender (tied), or a small selection of lenders (multi-tied).

This could result in the mortgage applicant getting a deal that costs them more when compared to other deals that are available. Mortgage deals with even just a small difference in interest rate will end up significantly different over the term of your mortgage, so being pressured into taking a deal could end up costing you thousands of pounds.

Independent brokers often have access to exclusive deals that an in-house mortgage broker would not be able to offer you, so choosing a whole-of-market broker is the only way to ensure every deal has been considered to get you the best one available.

Another factor to consider when you are deciding whether to use an estate agent’s broker, is that if you get a mortgage agreement in principle, the estate agent will be aware of what asking price you can go up to, which could mean that they use that information to their advantage. The more money you pay for a property, usually the higher amount of commission they will earn, so they could try to give you the impression that the property is likely to receive the asking price, to encourage you to place a higher offer, for example.

Mortgage broker fees

You might also find that the mortgage broker recommended by the estate agent will charge a broker fee but not all mortgage brokers charge for their services. All brokers receive a commission from the lender on completion of the mortgage arrangement. However, some choose to charge clients in addition to this commission sum. So, if you are looking for the best financial deal, opting for a fee-free broker such as Boon Brokers will save you money because no client fee is charged at any stage of the process.

How to choose a mortgage broker

There are a few different factors that you might want to take into consideration when you are selecting your mortgage broker. Whether they charge a fee could be one factor, and whether they are whole-of-market is another important detail that will influence how good a deal you can get.

Another key element of your decision is whether you require specialist advice and have circumstances that might mean you do not meet the lending criteria for a standard mortgage. For example, self-employed people, or people with adverse credit or no credit history often struggle to find a mortgage lender that will approve them. In these cases, a specialist mortgage broker will usually be able to find a lender that specialises in the area required.

In addition to this, you will want to find a broker that is easy to work with and that you can trust to put your interests first. You can choose a broker that has been recommended by somebody you know, who has experienced a great level of service. You can also do some online research to find out how well rated they are by their past customers, through sites such as Trustpilot or Google reviews.

You might also want to have a chat with the broker to find out whether you find them helpful and if you have a good gut feeling about working with them, or if they are not the kind of people you want to trust with your mortgage application.

By reading the online reviews, you should be able to form a good idea of how good the service is and any problems that other customers have had with the broker. You can find more tips on how to choose a mortgage broker in our article on this topic.

Conclusion

Estate agents can be very pushy in regard to trying to get you to use their in-house broker but it is important to stand your ground if they cannot offer the best deal. The in-house broker can provide you with a breakdown of the mortgage costs for you to then compare against other deals on the market, to see whether there are better deals available. You are entitled by law to be able to use your own choice of broker and you should exercise your rights to find the best deal for your circumstances.

Choosing a deal from the limited options available from the estate agent’s in-house could result in a much less favourable financial deal, so it is definitely worth taking the time to check all of the options and understanding the overall financial implications.

Boon Brokers is an independent mortgage broker who will always provide completely impartial advice and recommendations, based on finding the best possible mortgage deal on the market for our clients. We are a whole-of-market broker who works on a fee-free basis, with vast experience in finding the right mortgage deal based on our clients’ details.

Call us for unbiased advice and a free consultation.