By Karl Griggs, Director, Commercial Processing Centre
There is no doubt that the buy-to-let (BTL) market is booming, and experts say it is on course to continue. The Council of Mortgage Lenders recently predicted that the value of the private rental sector will pass £1 trillion this year.
New landlords may find starting out with property investment daunting, but brokers are there to support them through the process, and as they grow their portfolio. A mortgage broker acts as an intermediary, working with individuals and businesses to find them the right loan from a lender. Brokers offer the whole package; reviewing a client’s financial circumstances, credit checking and identifying the right product within the market that suits them. This helps take away the hassle for you, saving time and effort.
So why use a broker? We have picked out what we believe are the most important reasons:
1) Overview of the market
If you are going it alone, it takes a lot of legwork to approach the number of lenders needed to get a true overview of the market and find the best option. You almost certainly will not find it by just going to one lender. Also, if you apply to numerous lenders yourself, this affects your credit score; by going through a broker, you avoid affecting your credit rating. Brokers have a good overview of the vast and sometimes complicated range of finance options available, and can source the right loan for you quickly and efficiently.
2) Expertise and relationships
Brokers have specialist knowledge and industry relationships; because a broker may have a strong relationship with a lender, they can exert influence and chase things in a way you are just unable to do by yourself. A broker will also know the various lenders’ criteria inside out and will advise you which lender you are best suited to.
A broker deals with lenders on a day-to-day basis, so they will know the timescales for the application process for each one and when you are under pressure, for example after buying at auction, they will make sure your deadline is met.
In fact, if you are looking to buy at auction, your broker can help you get agreement in principle from your lender for a certain amount ahead of time. This way, you already know you have been approved subject to survey when you bid.
Additionally, lenders have specific response times they commit to for brokers, which they do not have for clients.
A mortgage broker will complete all the required paperwork with you to ensure all the correct information is given correctly. If you do not use a broker, you will find yourself filling out lots of paperwork for numerous lenders; and your attempts may not be successful, resulting in a waste of your time. A broker will gather all the relevant information, saving you time and effort.
5) Getting the right deal
Last but not least, a good broker will not just get any old deal for you, they will be able to secure you the right loan, at the right rate, with the right terms. This is perhaps the greatest advantage of using a broker.
These are just a few, but not all, of the advantages to landlords of using a broker. When choosing the right broker, it is important to look for someone who you trust to handle your transaction effectively and efficiently. I would strongly recommend landlords use a Financial Conduct Authority (FCA) regulated broker, as we are required to follow guidelines set by the FCA to ensure professional standards are met. This is especially important given the change in EU regulation in BTL mortgages next year. Landlords should use a regulated broker now, so that you can build a relationship with a trusted adviser who will be best placed to guide you through the new regulation.
Another important piece of advice is to make sure that you work with your broker, and be transparent with the information you provide. A broker is only able to secure you the right deal if you are clear about financial matters and credit history. Time is of the essence when dealing with property purchases, so make sure you keep your broker updated on all bids and transactions.
A broker’s job is to ensure that you obtain finance swiftly and smoothly. The broker who does that well, is the right one for you.
If you are looking to raise finance to invest in property, then do contact us.