The short answer
When people ask me about mortgage broker vs bank, they usually want a yes or no. The honest answer is that it depends on what you need. If your current lender has offered you a decent rate and nothing about your life has changed, going direct can be perfectly sensible. If you want to borrow more, your income is not straightforward, or you simply want to know you are not overpaying, a broker will usually earn their keep.
You are staying with your existing lender, borrowing the same amount, and you are happy comparing mortgage rates yourself. A product transfer like this is quick, usually has no valuation or legal work, and you can often accept it online in ten minutes.
You want the whole market checked, you need extra borrowing, you are self employed, you have had credit problems, or your home has changed in value. These are the cases where the right lender makes a real difference to what you pay and whether you are accepted at all.
My rule of thumb: even if you end up going direct, get a broker to check your bank's offer first. With a fee free broker it costs you nothing to find out.
Going direct
Going direct means dealing with one bank or building society yourself, either your existing lender or a new one. It sounds simple, and often it is. But there are a few things the bank will not spell out.
A bank can only offer its own mortgage products. The adviser in the branch is not being unhelpful when they say nothing about a rival's cheaper deal; they are tied, and the rules do not let them recommend it. With one lender you see one set of rates, and you have no way of knowing where they sit in the wider market.
Many lenders let existing customers switch online with no advice at all. That is called execution only. You pick the product and the responsibility for the choice is yours. If you take advice instead, from the bank or a broker, the adviser has to recommend something suitable, and you can complain to the Financial Ombudsman Service if they get it wrong.
If you apply direct to a new lender and they say no, you are back at square one with a hard search on your credit file. Nobody rings you to say which lender is likely to accept you instead. This is the bit that trips people up, because a decline usually comes down to lender criteria rather than anything wrong with you.
To be fair to the banks, the rates they offer existing customers are sometimes competitive. A product transfer also avoids a fresh affordability check, which matters if your income has dropped or your credit score has taken a knock since you last applied.
If you are weighing up staying with your lender against moving, our guide to product transfer vs remortgage goes through that decision in detail.
Using a broker
A mortgage broker acts as the middleman between you and the mortgage lenders. That sounds like an extra layer, but in practice it removes work from your side, not adds it. Here is what a good broker should be doing for you.
We compare high street banks, building societies and specialist lenders in one go, including your current lender's retention deals. You get a wider range of mortgage products than any single bank can show you, and a clear reason why one deal beats the others.
Some lenders only work through brokers, and some keep certain rates for the intermediary market. It works the other way too: a few deals are only available direct. A good broker will tell you if your bank's direct offer is genuinely the best one.
Lenders get twitchy about different things. One will happily use your bonus, another will not. One accepts a recent job change, another wants six months. Knowing which lenders accept your circumstances before you apply is most of the job, and it is how we keep declines to a minimum.
We collect your documents, submit the mortgage application, deal with the valuer and solicitors, and chase the lender when things go quiet. You get one person to ring rather than a call centre queue.
A remortgage is a good time to check your life cover and income protection still fit the new mortgage. We will raise it, but it is your choice. Our mortgage protection page explains the options.
Side by side
Here are the pros and cons of each route on a typical remortgage. Every case is different, but this is the pattern I see week in, week out.
Pros and cons
To keep this fair, here is the downside of using a mortgage broker as well as the upside. Going to your own bank is not always the wrong call.
One conversation covers multiple lenders, from high street lenders and building societies to specialist lenders that do not deal with the public. You get regulated mortgage advice based on your full financial situation, not just the deals your own bank happens to have. An independent mortgage broker can often find a better deal or competitive rates you would not have found alone, and will tell you when your bank's offer is the one to take.
Some brokers charge fees, so check before you start. Not every broker is whole of market, and a few lenders, including some building societies and credit unions, only lend direct. Quality varies too, so ask the questions further down this page. And if you are happy with the same bank, borrowing the same amount, a broker may simply confirm what you already suspected.
Either way, it costs nothing to get a second opinion on your mortgage deals before you sign.
Commission and fees
This is the question people are sometimes too polite to ask, so here it is in plain English. There are only two places a broker's money can come from: the lender or you.
The lender pays a procuration fee
When your mortgage completes, the lender pays the broker a commission, known as a proc fee. It is typically paid as a small percentage of the loan, and lenders usually pay a smaller fee on a product transfer. It comes from the lender's own budget, so you are offered the same interest rate through a broker as you would be if you went to the lender yourself.
It has to be disclosed
Mortgage brokers are regulated by the Financial Conduct Authority. Before you commit, we must tell you whether we charge a fee and how we are paid. The amount of commission the lender pays us is also shown on your mortgage illustration, so nothing is hidden.
Tied or whole of market? Some brokers only use a panel of lenders, and some advisers are appointed representatives of a larger network. Neither is wrong, but you should know which you are dealing with. Ask the question and get the answer in writing.
For typical broker fees across the UK and real examples, read our guide on how much a mortgage broker costs.
Our fees
Remortgages are always fee free with us. We are paid by the lender when your new mortgage completes, so using us to check your bank's offer costs you nothing, whatever the outcome.
Straightforward remortgage: no fee
On a straightforward remortgage you pay us nothing. We are paid by the lender when the mortgage completes.
Smaller mortgages: no fee
Even if your balance is under £100,000, a remortgage with us is still fee free.
Complex or adverse: no fee
Self employed income, a few marks on your credit file or a case that needs extra work? It still costs you nothing. Remortgages are always fee free with us.
Going direct has its own costs too: product fees, valuation fees and legal fees can all apply. Our guide to remortgage costs explained lists them.
Worked example
Numbers make this easier. These figures are for illustration only and are not today's rates.
Sarah and Tom owe £220,000 on a home in Romsey worth around £400,000, with 22 years left. Their fixed rate is ending and their bank has sent a product transfer offer: a five year fix at 4.49% with no product fee. Monthly payments would be about £1,313.
We find a different lender offering a five year fix at 4.09% with a £999 product fee, free valuation and free legal work. Payments would be about £1,265 a month, so £48 less.
Bank offer: 4.49%, no fee
Interest over five years: about £45,898. Plus fees: £0. Total cost: £45,898.
Broker deal: 4.09%, £999 fee
Interest over five years: about £41,667. Plus fees: £999. Total cost: £42,666.
The result: about £3,232 better off over the five years, even after the fee. They also owe roughly £1,350 less at the end.
Now change one thing. Say the bank had offered 4.19% instead. The total cost over five years would be about £42,722, almost exactly the same as the broker deal. In that case I would tell Sarah and Tom to take the product transfer and save themselves the hassle. A lower interest rate is not always a cheaper deal once you add the fees.
Calculator
Put your bank's offer in one side and any other deal in the other. The calculator adds the fees to the interest so you can see the true cost over the fixed period.
Being straight with you
I would rather lose a case than push someone into a remortgage that does not help them. These are the times I tell clients to stay where they are.
Your lender's offer is competitive once fees are included. You are not borrowing more or changing the term. Your income has fallen or your credit history has a fresh blip, so a new affordability check could go against you. Or your home has dropped in value and a new lender would put you in a higher loan to value band.
You want to raise money, consolidate credit card debt or change the borrowers. You are self employed or paid in bonuses and commission. You have had past credit problems. Or your fixed rate ends soon and you have not compared anything yet. Our self employed mortgages and bad credit mortgage broker pages cover those cases.
Even when you go direct, a broker can still check the offer for you. If it is the best deal, we will say so.
Choosing a broker
Not all brokers work the same way. Before you hand over your payslips, ask these. A good broker will answer every one without blinking.
Are you whole of market or tied?
A tied adviser can only offer certain lenders. Whole of market means they can compare the wider market, including specialist lenders.
Do you charge a fee, and when?
Get the amount and the timing in writing. Some brokers charge on application, which you may lose if the case falls through.
How much commission will you receive?
Any broker should tell you. The figure also appears on the mortgage illustration the lender produces.
Can you check my current lender's offer?
A good broker will compare your bank's retention deal alongside everything else, not ignore it.
Who will handle my case?
Ask whether you will speak to the same adviser throughout, and how quickly they answer the phone.
Are you FCA authorised?
Check the firm on the FCA register. Ours is firm reference 1011890.
You can also read what our clients say on our reviews page.
Checklist
Whichever route you choose, work through these in order and you will not miss anything.
Find your end date
Check when your fixed rate ends and whether there is an early repayment charge before then.
Read your lender's offer
Note the rate, the product fee and how long the deal lasts. Lenders usually send this a few months before the end date.
Get a broker comparison
Ask a mortgage broker to check that offer against the market. With us it won't cost you anything, because remortgages are always fee free.
Compare the total cost
Add fees to the interest over the fixed period. The calculator above does this for you.
Gather your documents
Recent payslips or accounts, bank statements, ID and your latest mortgage statement.
Lock in early
Many lenders let you secure a new deal around six months ahead, so you are not left on the standard variable rate.
A few of the lenders we compare for remortgages
Frequently asked questions
For most remortgages a broker gives you more choice, because a bank can only offer its own products. Going direct can make sense if your existing lender's offer is competitive and you are not changing anything. We can check that for you, and it's always free on a remortgage.
Not always. Some lenders keep rates for brokers and a few keep deals for direct customers. The rate on a given product is the same either way. The difference is that a broker compares many lenders, so you are more likely to find the cheapest deal for your situation.
You get the same rate on a product transfer direct or through a broker. What a broker adds is a check that the product transfer is actually your best option before you accept it.
An initial chat leaves no search at all, and many lenders now use a soft search for an agreement in principle, which other lenders do not see. A full mortgage application leaves a hard search, the same as applying direct. Choosing the right lender first means fewer applications.
It depends on the broker, so always ask. With us the answer is no: remortgages are always fee free, whatever the loan size or circumstances.
The lender pays the broker a procuration fee when the mortgage completes. It does not change your interest rate, and the amount is shown on your mortgage illustration.
Often, yes. Each lender has its own criteria, so a decline from one does not mean a decline from all. We look at why it happened and which lenders are likely to accept you.
Speak to a broker first if you can. They can include your bank's offer in the comparison. If you go to the bank first and accept, you may lock yourself in before seeing other options.
A mortgage broker specialises in mortgages and related protection. A financial advisor usually covers pensions and investments. Both are regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on your mortgage. Alexander Southwell Mortgage Services Ltd is authorised and regulated by the Financial Conduct Authority (FCA no. 1011890).
When your deal ends there are really two routes: go direct to a lender, usually your own bank or current lender, or use a mortgage broker. Neither is always cheaper. Here's how each one works in practice, so you can decide whether to use a broker or go direct for your remortgage.
Going direct means dealing with one lender's own advisers. They can only recommend their own range, so you see a single lender's product range, not the market. If your current lender's retention rate is already competitive and nothing about your circumstances has changed, going direct to a lender for a product transfer can be quick and painless.
A whole of market broker can compare mortgages from multiple lenders, including broker only deals and intermediary only lenders you can't approach yourself. A tied broker or a multi tied broker works from a restricted panel, so always ask which kind you're talking to. We're whole of market, and our market access covers high street banks, building societies and specialist lenders.
This is where a broker earns their keep. Past credit issues, self employed income, contractor income, multiple income sources or an unusual property all narrow the field. Apply to the wrong lender and you get a decline and a hard credit search on your credit file. A broker who knows each lender's criteria can point you at the right one first time. Nobody can guarantee approval, but we can stack the odds in your favour.
Occasionally a lender keeps direct only deals for its own customers, and occasionally a deal through the broker channel is cheaper. Most of the time the same product costs the same either way. What matters is whether your bank offers the most competitive deal for you, and you only find that out by comparing.
Most mortgage brokers receive a procuration fee from the lender when the mortgage completes. Some also charge a client fee, so ask what the mortgage broker cost is before you start. With us a remortgage is always free, and the lender's payment doesn't change your interest rate.
Yes. Mortgage brokers are regulated by the Financial Conduct Authority, and you can check any firm on the Financial Conduct Authority register. Our FCA number is 1011890. Talking to a mortgage broker won't affect your credit score either; nothing shows on your file until an application goes in.
My honest view after 15 years: get your current lender's offer, then ask a broker to check it against the market. If your bank's deal really is the best one, I'll tell you, and I'll help you take it.
Your home may be repossessed if you do not keep up repayments on your mortgage.
