In this article I’m going to be looking at whether being an existing customer of a bank means that you’ll get a better mortgage rate than going with a mortgage Broker. We ask will my bank give me the best mortgage? Are there any advantages to going straight to your bank, or not?
I mean, you’d think so, wouldn’t you? You’ve been with them since your nan opened you an account with a pound for your birthday, surely they’ll reward your years of unwavering loyalty now that you want to hit them up for a few quid to buy a house? Right? Will my bank give me the best mortgage?
In a word, no!
Banks don’t treat existing customers any different to brand new ones – how long you’ve banked with them and how much money you have in your account means diddly squat.
But hang on, your bank already knows your circumstances and has some idea of your earnings and reliability – surely this will result in less effort when it comes time to assess your mortgage application?
You will need to provide exactly the same documentation for your mortgage application whether you are going to a broker or the bank – or anywhere else for that matter – so you’d be mistaken for thinking that your bank already knows what you earn and what you spend and therefore doesn’t need to see all the paperwork.
Their banking system and their mortgage system are often completely separate, so when they do your mortgage application they won’t be able to see your day to day banking details – you’ll still need to provide copies of all that yourself.
Come on, there must be SOME advantages?
The Advantages Of Getting Your Mortgage From Your Bank
None. But it’s fun to read a title in bold isn’t it?
So what now then? Where DO you go? I’m glad you asked..
Where Else Can I Get A Mortgage From?
Of course, it isn’t just banks that provide mortgages, which you’re probably very glad to hear now that you’ve been told there are absolutely no perks to going to them anyway. In all honesty there are much better options open to you if you take a look around.
It is a competitive industry and mortgage providers want your business, so don’t rush! Take a good look at what is on offer.
Building societies are owned by their members rather than shareholders and can usually afford to offer cheaper mortgages – WAIT! – before you rush off to your nearest building society, I’m not finished yet!
Specialist Mortgage Lenders
Most high street lenders are looking for the most common type of mortgage customer – as are the banks and building societies. But what if you don’t fit that mold? What if you are self-employed or work freelance? What if your credit rating is poor, or you need financial assistance from family or friends? There are many lenders specialising in all kinds of circumstances, so it makes sense to do your research and find a lender who can meet your needs.
Some credit unions now offer mortgages to rival many of the leading lenders. They are able to be more flexible on skipping mortgage repayments and are more likely to lend to those who have bad credit. You will usually have to be a member and have opened a savings account for a few months, but for someone who might have experienced financial difficulty they are certainly a viable option.
If you do have bad credit then I would highly recommend you read my article, Bad Credit & Buying a Home you may well find it useful.
Should I Use A Broker To Find Me A Mortgage?
In a word – YES. Researching all these different options yourself is a lot of work, surely it’s better to leave it to a professional. It is, and this is where a broker comes in.
So What IS A Broker?
A mortgage broker is basically the middleman between you and the mortgage lenders, and they will do all the leg work for you by searching every UK lender in order to find the right mortgage product to suit your needs – kind of like the human version of an online comparison service but far better!
They will meet with you in person so they can get to know exactly what it is you are looking for before they give you advice, and can help you gather necessary documentation and with completing applications. Not only that, but brokers are a fully regulated and insured body, and are responsible for the advice they give you, which is reassuring isn’t it? They can’t fully answer “will my bank give me the best mortgage” but they can certainly set you on the right path.
And Is It Going To Cost Me?
Most brokers do charge a fee for their advice, but impartial advice can be invaluable – especially when it comes to something as important as a mortgage. Normally the fee isn’t payable unless the new mortgage happens, which makes them more accessible than an employee at the bank. In effect, the mortgage broker works for you, and so it is easier to get the answers you’re looking for.
Any More Advantages?
If a professional who knows the industry inside out doing all the hard work for you isn’t enough, then another advantage to using a broker is that there are some lenders who only work with brokers, so your broker could have access to mortgage products that you wouldn’t know about otherwise.
Of course this doesn’t just apply to first-time buyers. What about if you already have a mortgage with your bank and want to re-mortgage? Better the devil you know, right?
What About If I Want To Remortgage?
It seems to be a running theme with most things these days – mobile phone contracts, TV packages etc – that new customers get better deals than existing customers. How does that work when it comes to renewal customers and mortgages? Will your loyalty to the bank be rewarded now?
It is becoming more and more common now that banks are offering existing mortgage customers better interest rates when their fixed-rate mortgages end, and even slashing fees when it comes to remortgaging – Metro Bank for example has got rid of its remortgage fees for existing customers altogether. However, remortgage deals are often similar to new mortgage deals, except most will cover the valuation and legal fees that are incurred when you transfer your mortgage from one lender to another.
Just because your bank is offering your THEIR best rate, it certainly doesn’t mean it is THE best rate, so it never hurts to do your research and compare what else is out there before you make your final decision, and, in short, the best way to do this is still through a broker.
We hope that answers your burning questions “will my bank give me the best mortgage?”. If not feel free to give me a call directly on the number below and we can run through your own specific circumstances one to one.
Your home may be repossessed if you do not keep up repayments on your mortgage.