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What is a mortgage broker and how do they differ from a bank lender?

Not sure how a mortgage broker works, or whether a mortgage broker or bank lender is best? We’ll talk you through all of your options.

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Whether you’re getting a mortgage for the first time or remortgaging yet again, the ins and outs of mortgages can seem pretty intimidating — and that starts with figuring out where you get your mortgage. You may have heard of mortgage brokers or banks as your first port of call for mortgages. The truth is, you can start with either. But there are some very big differences between banks and brokers, so we’ll talk you through them.

Now, if you’re wondering “Do I need a mortgage broker?”, you’re not alone. Mortgage brokers have become increasingly popular. In fact, as many as 90% of mortgages in the UK involve a mortgage broker, so it’s safe to say they’ve become the norm for most borrowers. But what’s the difference between a mortgage broker and a bank? And which should you use? Here’s everything you need to know so you can make the right choice for you. 

What is a mortgage broker?

Great question. So a mortgage broker essentially works as a liaison between you and a lender. You could go to a lender directly (normally, that would mean your bank) and see what mortgage deals they have on offer and then do the paperwork yourself. Or you can go to a mortgage broker, who will normally have access to a lot of different deals from many lenders.

A mortgage broker’s job is to look at all of them to decide the right fit for you — and then they handle the paperwork. So if you’ve ever worried about being rejected for not ticking a certain box or not knowing whether you can use a phone bill as proof of address, it’s their job to take care of all of that for you. As we said, the vast majority of mortgages go through a lender, likely because they take a lot of the stress out of the process and could save you a small fortune too.

Is a broker the same as a bank?

In short — no. A bank is normally a lender. That means they lend you the money. Remember, a mortgage is essentially a very big, very long loan. If you use a mortgage broker, they’re not the ones actually loaning you the money for your home — instead, they look at the loans offered by many different lenders, including banks, to find the right choice for you. You can either go directly to a bank or to a mortgage broker. The main difference is that a broker will normally have access to more loans to choose from, and they’ll help manage all of the paperwork so you can relax.

Does a mortgage broker charge a fee?

They can. Brokers often make money from a lender, but sometimes they make it from the person borrowing as well. But it’s important to read the fine print, because some brokers are more transparent about their fees than others. 

Sometimes a mortgage broker charges a flat fee. Sometimes they don’t seem to charge a fee, but there will be fees associated with the mortgage that they get a cut from. Sometimes they’re free for the borrowers to use (that’s you) and only make money from the lender.  So every broker is different and you shouldn’t be afraid to ask questions. But even if they charge their fee can be worth it — especially if they get you an exclusive rate. An upfront cost may lead to a lot less money on your mortgage payment each month, so you have to consider all of the options. Whether you go with a mortgage broker or a bank, it’s important to do your research.

Does a bank charge a fee?

If you’re comparing mortgage brokers and banks, you may be looking to find the cheapest option. But, like with brokers, it can be a little complicated with lenders. Make sure to look at any “product fees” to see how much it will cost to "arrange" the mortgage (that’s just a fancy word banks use when they really mean to get a mortgage). That being said, if you find a really great rate then it might be worth it to be a product fee. If you do go with a mortgage broker, they can help talk you through your options — but again, it’s your job to make sure you’re considering everything and reading the fine print.

What are the types of brokers?

Thinking a mortgage broker may be right for you? Well, there are a couple of different kinds of brokers for you to consider. 

  • Tied or “multi-tied” brokers

  • Whole of the market brokers

The main difference is how many lenders they work with. Tied or “multi-tied” brokers may only be linked to one or a handful of lenders, though sometimes it’s dozens and dozens of different lenders. The whole of the market brokers can choose from anyone. In either case, it’s their job to handle the liaising, deal with the paperwork, and make sure you’re getting the right deal for you. They should have good relationships with any lenders they work with, and understand all the little details so you don’t have to worry.

Is it better to go through a mortgage broker or a bank?

As we said, it’s your choice. There are some benefits to going with a broker — they take care of the paperwork and details, they do all of the chasing for you, and they can get you exclusive deals and talk to lots of different lenders. There’s a reason most people use a mortgage broker, after all. But maybe you have a good relationship with your bank and want to be able to deal with any hiccups directly with them. In that case, you may want to go directly to your bank or another lender you trust to see what they can do for you — but you may end up paying more if you miss out on better deals from a broker. 

So, what’s the difference between a mortgage broker and a bank? A whole lot. A broker isn’t a lender, they’re someone who facilitates mortgages from lenders — and that can include banks. You can apply directly to your bank or another lender, and be responsible for all of the paperwork yourself, or you can have a broker take care of the details, handle the paperwork, and look at different lenders and rates on your behalf.  It’s a huge decision (and a huge loan, for most of us), so it really is up to you.

If you'd like to talk to a broker about your next mortgage Strike Financial Services is here to help. We have helped thousands of people with mortgages to help them find their dream home.


Definitely not. A bank is a lender — they’re the ones actually lending you the mortgage, and you can go directly to them to apply for a mortgage. But a mortgage broker works with a range of lenders (likely including your bank). So they take care of the paperwork and application, but also look at a bunch of different lenders to find the right deal for you.