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Could you get a better mortgage rate by using a broker?
When you're shopping around for the right mortgage, the number of deals on the market can seem overwhelming. But are you seeing all available options or are some only available through a mortgage broker?
Which? analysis has found more than four in ten mortgages are broker-only, meaning you're unlikely to find them on comparison sites. And if you're looking to invest with buy-to-let property, the proportion of broker-only deals rises to almost two-thirds.
So, does that mean you might be missing out on the best rate by going it alone? Which? analyses the best available rates and whether you need a broker to get the best deal.
Buying home or remortgaging: should you use a broker?
We've crunched the numbers and found that of the 5,449 mortgages currently available to buyers and remortgagers, 42% are only available through brokers - be it all mortgage brokers or a select panel used by the individual lender.
This dwarfs the 32% of deals only available directly from lenders, and the 26% that can be obtained either directly or through a broker.
When we look at specific types of deal, the standout figure comes in the variable rate market - including trackers, discount and standard variable rate mortgages. Of these, 51% are only offered through intermediaries.
As the chart below shows, whether you're a buyer with a big deposit (of 25% or more) or a small one (of 5% or more), the percentage of deals available directly or through intermediaries doesn't change significantly.
Are the cheapest rates available through brokers?
With more deals to choose from, a broker can help you sort the wheat from the chaff. But are the best rates on offer through advisers?
In the tables below, we've shown the best introductory rates available on two and five-year fixes at four popular loan-to-value (LTV) levels - and the results are a mixed bag.
Two-year fix
| LTV | Lender | Initial rate | Revert rate | APRC | Fees | Direct/broker |
| 60% | Furness BS | 1.39% | 5.79% | 5.2% | £1,250 | Broker only |
| 75% | Halifax | 1.44% | 4.24% | 3.8% | £1,495 | Both |
| 90% | Lloyds Bank | 1.79% | 4.24% | 3.9% | £1,499 | Direct |
| 95% | Newcastle BS | 2.59% | 4.49% | 5.1% | £498 | Both |
Five-year fix
| LTV | Lender | Initial rate | Revert rate | APRC | Fees | Direct/broker |
| 60% | Skipton BS | 1.78% | 4.99% | 3.8% | £1,995 | Broker only |
| 75% | Halifax | 1.87% | 4.24% | 3.4% | £1,495 | Both |
| 90% | Yorkshire BS | 2.21% | 4.99% | 3.9% | £1,495 | Direct |
| 95% | Monmouthshire | 3.08% | 5.24% | 4.4% | None | Both |
Source: Moneyfacts. 4 June 2019.
Buy-to-let mortgages: majority of deals only available through brokers
In the buy-to-let market, it's a different tale entirely, with broker-only deals dominating.
Overall, 69% of products are only available through brokers, with fixed-rate (72%) and deals for buyers with small deposits (78%) leading the way.
The use of brokers in the buy-to-let market may be having a significant effect on the number of applications that result in an offer. Data from the Intermediary Mortgage Lenders association shows that 89% of buy-to-let applications are successful.
Are the cheapest rates available through brokers?
For buy-to-let deals, we're going to look at slightly different LTV levels, as you're more likely to need a bigger deposit than if you were taking out a standard residential loan.
In the tables below, we've outlined the best available introductory rates on two and five-year fixed-rate buy-to-let deals at 60% and 75% LTV.
Two-year fix
| LTV | Lender | Initial rate | Revert rate | APRC | Fees | Direct/broker |
| 60% | Barclays | 1.47% | 5.24% | 4.8% | £1,795 | Both |
| 75% | Sainsbury's | 1.67% | 5.24% | 4.8% | £1,995 | Broker |
Five-year fix
| LTV | Lender | Initial rate | Revert rate | APRC | Fees | Direct/broker |
| 60% | Sainsbury's | 1.99% | 5.24% | 4.1% | £1,995 | Broker |
| 75% | Accord | 2.28% | 4.99% | 4.1% | £1,995 | Broker |
Source: Moneyfacts. 4 June 2019.
Consumers don't understand the benefits of a broker
A new report by the broker Legal & General claims that homebuyers don't understand how a mortgage adviser could assist them in finding the right home loan.
A survey of 2,000 homeowners found that brokers were more commonly used by people who regularly remortgage, and that a third of borrowers thought a mortgage adviser was there to support the lender, rather than the customer.
In reality, a mortgage broker will help you find the right mortgage for your circumstances, including lenders likely to accept your application. They can also help you speed up the paperwork and answer any questions about the process of applying for a mortgage.
Brokers are generally paid by commission from the bank they place your mortgage with. In some cases, you may also be asked to pay a fee to cover the service.
How to choose a mortgage broker
- Find a whole-of-market broker: One of the main benefits of using a broker is that you can access all of the deals, rather than just those that your bank or building society wants to sell to you. However, some brokers will only work with a select panel of lenders. A whole-of-market broker will have access to every deal on the market, ensuring you find the best possible deal for your circumstances.
- Ask about direct-only mortgages:As we outlined earlier, some mortgages are only available if you apply direct to a bank. In theory, brokers have no obligation to tell you about these deals, but a good adviser will inform you if the right product for you is only available if you approach the lender yourself.
- Consider the pros and cons of different types of brokers:Most traditional mortgage brokers will either work with customers over the phone or in person, but there's a new wave of so-called 'robo' advisers - web-based services that allow you to compare, and in some cases apply for, mortgages online.
Find out more:get to grips with choosing an adviser with our guide on finding the right mortgage broker.