A History of Online Brokers
Traditionally when you needed a mortgage, you would go directly to the bank/building society with whom you hold your main account, and ask them what their best rate is. The more savvy buyers out there may have shopped around with the other banks/building societies for the best deal, but the options stopped there.
As the market grew, the need for whole-of-market comparison emerged, and hence the birth of the mortgage intermediary, or ‘broker’ as they are more commonly known. Traditional brokers often partner with estate agents in order to get new customers, paying a percentage of their fee back to the estate agent when the deal completes. But where there’s a problem, or inefficiency, the market will always react.
Digital mortgage intermediaries then started popping up around the early 2000s, their main advantage was using fintech to scour the whole of the market effectively for the best mortgage deals out there.
Given the amount of business online mortgage intermediaries write, they are given exclusive/preferential rates and products by the lenders. We often hear the question “I’ve been a Natwest customer for 30 years, would I not get a better rate by going to them directly?” The short answer is probably no. The very best rates are typically reserved for the mortgage intermediaries who write the most business, and given brokers’ only business is mortgages you can comfortably bet they’re facilitating more mortgages than consumers.
Why should I use an online mortgage broker rather than a traditional broker then?
Like we mentioned earlier, traditional mortgage brokers often partner with estate agents, and not wanting to bite the hand that feeds them – the brokers have to keep the estate agents happy as well as their mortgage clients. This often means maximising the value the property is sold for, using information regarding the buyer’s income and deposit/equity in their current home.
An online broker, such as Mortgagez, is on the buyer’s side. We are here to help you get the mortgage for the home of your dreams, at the very best rate. As well as being on your side, Mortgagez is a fee-free service when you go via our portal, as we are paid by the lender, so you don’t pay a penny to us. Most traditional mortgage brokers will charge a fee of around £500 for their services, a cost you can undoubtedly do without during what’s already an expensive process.
The advantages of switching to an online broker are now extremely obvious. It’s quicker and cheaper, though with the inevitable advancement of the industry this has presented the further question of – just how much do I want to digitise?
Some companies first intended to fully automate the entire mortgage process using artificial intelligence, with consumers being able to obtain a mortgage without ever having to speak to anyone, neither on the phone nor in person.
Ultimately it is down to personal preference as to how much you’d like to automate the mortgage application process, ranging from 100% automated to 100% old-school and anything in between. At Mortgagez, we use a blended hybrid model – using the latest FinTech to scour the whole-of-market for the very best deals, whilst still using fully qualified mortgage advisers you can actually speak to. Buying a home is probably the biggest expense and financial commitment most of us will ever make and we believe in giving our customers the chance to get the guidance of an expert before making that decision.
YOUR HOME MAY BE REPOSSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE
Any guidance and/or advice contained within this document is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. Any technical or regulatory information contained within this document was correct at the time of producing it but as it may be subject to change it should not be exclusively relied upon when making a financial decision. The Financial Conduct Authority does not regulate advice on Buy to Let mortgages.
Article written: Aug 2020 301120 MZ000134
