Mortgage advisors: a beginner's guide

Do you need a mortgage advisor, and how do you find the best one to snag you a great mortgage deal? We take you through the steps, and explain the difference between mortgage advisors and brokers

mortgage advisor advice: book with calculator shaped like a house
(Image credit: Getty)

Mortgage advisors: who are they and how can they help find the best mortgage rate for you? Is a mortgage advisor really necessary, and how much should be paying for one? Is an independent mortgage advisor better? We answer all these questions and more in our beginner's guide. And we explain how they are different from mortgage brokers. 

Done reading and ready to compare mortgages? Jump straight down to the free comparison tool developed by our partner Habito.

Why use a mortgage advisor?

Mortgage advisors are independent, act in your best interest, must be open about their fees and services, and must comply with or belong to the relevant professional body to legally offer their services. In the UK, that means they are regulated by the FCA (Financial Conduct Authority) or be the agent of a regulated firm. Use the FCA register to check.

In other words, they're there to find you the very best mortgage. A couple of things to look out for? The difference between mortgage advisors and brokers – and what can they offer you. Check the following (and see more on this below):

  • A mortgage advisor is usually tied. This means they are affiliated to banks or offer advice as part of an estate agent's service (who work with a specific lender), and will only advise on their specific mortgages. This limits the mortgage options, although they still must help you choose the best deal from that lender. See more on this, below.
  • Is your mortgage advisor whole of market? This means they have access to mortgage deals from a panel of lenders from every segment of the mortgage market. They may not know about every single deal from every single lender, but will be able to choose from a wider selection of mortgages. This the case, it's more likely you're dealing with a 'mortgage broker' (more on this distinction, below).
  • Is your mortgage advisor independent? This means they work in a similar way to whole of market brokers. You usually pay this type of broker a direct fee.

Recent changes to how mortgage advisors work

Following a consultation, the Financial Conduct Authority have implemented a few changes to how mortgage advice works. The most important thing to know is that a mortgage advisor will be asked to record a reason if they offered you a mortgage that wasn't the cheapest one available. There are all sorts of reasons why a more expensive mortgage may be a better fit, but they have to give an explanation. 

How much do mortgage advisors charge?

Mortgage advisors charge for their services in different ways, so this is something to be clear of at the outset. 

Fixed fee mortgage advisor charges apply to all the mortgage advice they give – usually around £500 to £600.

Hourly rate – the longer you talk, the more you will be charged by this type of mortgage advisor. 

Percentage: some mortgage advisors charge a percentage of the mortgage, ie, a one per cent fee on a mortgage of £180,000 would be £1,800.

Combination – some charge a set fee and commission, too.

Fee-free is where the broker is paid commission by the mortgage lender so, for you, the advice for free.

When do you pay a mortgage advisor?

It depends but during your first phone call or meeting, they have to tell you exactly what you will pay and when. Some will require more than one payment. 

Mortgage advisor or mortgage broker: what's the difference?

The short answer is there isn't a vast difference: mortgage advisors and mortgage brokers perform exactly the same service, that is helping you compare different mortgages based on your individual financial circumstances. 

The longer answer, however, as outlined above, is that in the world of mortgages, 'mortgage advisor' often refers to a bank's mortgage broker, who will only advise you on that bank's mortgage options and receives either a commission or a salary from the bank. Their advice will still be impartial, but unlike a whole of market mortgage broker, the bank's mortgage broker, or advisor, is tied to that lender's products. 

Does that make mortgage brokers better than mortgage advisors? Not necessarily, because it might be that going with the bank's mortgage is the best option for you. However, research, including finding out about whole of market mortgage options is important. See below to find out more pros and cons of using an advisor over a broker. And find out more about mortgage brokers in our guide to get the full picture.

Mortgage advisor and financial advisor: are they the same? 

No. A mortgage advisor specialises only in mortgages; a financial advisor, on the other hand, is qualified to give you advice on a whole range of other financial products, most commonly investment options. Although some may know a bit about mortgages, financial advisors usually aren't the best people to give mortgage advice. Which isn't to say that, funds permitting, you shouldn't use the services of both. 

Mortgage advisor pros and cons

So, what are the pros and cons of using a bank's mortgage advisor as opposed to a 'whole of market' mortgage broker? 

Pro: no-cost advice

The most obvious benefit of using a mortgage advisor at your bank is that their services will often be free to you, with the bank paying the advisor's fees. You will get just as thorough a consultation with a bank's mortgage advisor as with any other broker, it will just be limited to the bank's mortgage options. 

Con: limited advice

But, and this is a big but, as we said above, you could be missing out on a better deal with another lender, so, if you're using the bank's mortgage advice service, you'll need to be pretty certain that you want a mortgage with them. 

You should also bear in mind that using the bank's mortgage advisor does not guarantee you a mortgage approval. 

Before you commit to a mortgage with your bank, it's worth at least having a look at what other options are out there, and with many online mortgage specialists now offering free online comparison tools, it won't take up much of your time. 

Mortgage advisors and coronavirus: what you need to know

You can still use the services of a mortgage advisor during Covid-19: most will be more than happy to meet you virtually. Also don't hesitate to use the services of an online mortgage advisors: they operate in much the same way, and you will still get to speak to someone, just at a slightly later stage in the mortgage search process.

Comparing mortgages

Decided to see what your options are before you commit? We've teamed up with online mortgage brokers Habito. Use their online comparison tool below to see how much (in theory) you could borrow. If you get in touch with them, they'll be able to give you detailed, unbiased mortgage advice, help you find the best mortgage deals, answer your queries, and even help with paperwork. They can also negotiate the best deal based on your financial history and current status. 

Anna is a professional writer with many years of experience. She has a passion for contemporary home decor and gardening. She covers a range of topics, from practical advice to interior and garden design.