Ask Jenni: Do I Need A Mortgage Broker If My Bank Has Already Agreed To Give Me A Mortgage?

Hi Jenni

I keep seeing you talk about the importance of using a mortgage broker on Instagram, but do I really need one if my bank has already agreed to give me a mortgage? I had an appointment with someone from my bank last week and they actually offered me far more than I thought they would. Some of the houses I like the look of on RightMove cost less than I can borrow! I came away from the meeting with an ‘Agreement In Principle’ so is there really any point going to the fuss of getting a broker now?

Bethany, 27, Bristol

Hi Bethany

Congratulations on getting an Agreement In Principle! What amazing news!

Since your bank has already agreed to lend you the money you need, technically you don’t have to get a mortgage broker. You’re now in a position where you can start viewing houses you like and if you find one you want to buy, you can put an offer down and take it from there.

However, although you don’t have to use a mortgage broker, that doesn’t mean one can’t benefit you.

In most cases, when a buyer approaches their own bank for a mortgage, their bank will only compare a handful of their own mortgage deals before telling you how much they’re willing to lend. When you use an independent mortgage broker, however, they’ll compare dozens and sometimes hundreds of mortgages from a wide range of lenders before highlighting the best ones for you. In some cases, a mortgage broker could save you tens of thousands of pounds over the course of your mortgage deal! Mortgage brokers can also get your much more rewarding deals than price comparison sites will.

Let’s imagine you borrow £130,000 at an interest rate of 3% over 35 years. You’d repay £500 a month and over the course of your mortgage term, this would cost you £210,082.

If, however, you managed to find a mortgage that offers you £130,ooo and an interest rate of 2% over 35 years, you’d pay just £431 a month and over the course of your mortgage term, you’d owe £180,913.

That’s almost £30,ooo saved!

I completely understand why you’re tempted to just stick with your bank’s offer, and if you want to do that, that’s fine. However, since you’ve already got an Agreement In Principle from your current bank, I really don’t think it’d take very long to get a new AIP from a mortgage broker. Some mortgage brokers will get you an offer within 24 hours! Sometimes, applying for an AIP can leave a soft footprint on your credit file, so be sure to tell your mortgage broker that you’ve already been offered a mortgage by your current bank. A responsible mortgage broker will be able to advise you on whether it’s a good idea to proceed. When I was in the process of buying my own place, I received 3 AIPs within the space of a few months and my credit rating wasn’t negatively affected.

If you’re unsure which mortgage broker to use, have a Google for one in your area or ask home-owning friends for a recommendation. Alternatively, you could do as I did and use an online mortgage broker like Habito.

Habito is a fee-free mortgage broker, meaning they won’t charge you a penny for using their services. It’s particularly useful if you can’t be bothered travelling to meet a broker face-to-face and you’d rather apply for a mortgage from the comfort of your desk or sofa. Also, if you create a Habito account using this link, you and I will each earn £100 cash on successful completion of your property purchase.