Online mortgage brokers: how to get a mortgage online

Is an online mortgage broker as good as a traditional broker? We explain all the differences

online mortgage brokers
(Image credit: Thomas Sanderson)

Online mortgage brokers: how do they really differ from conventional mortgage brokers and advisors, and should you be using one to find the best mortgage deal if you are a first-time buyer? This guide will take you through the pros and cons to help you decide.

Get more advice in our guide to mortgages for first-time buyers

Online mortgage brokers: how do they work?

Online mortgage brokers operate in a similar way to traditional mortgage brokers, with the big difference being that your initial contact will probably be with an online comparison tool or calculator, which is powered by an algorithm. This is a vast improvement on what used to be available online, which was comparing generic mortgage prices that had nothing to do with individual people's circumstances.

Now, when you go on an online mortgage broker's website, you will be asked a range of questions about your circumstances, which imitate as much as possible the affordability tests performed by lenders. You'll need to know, for example, how much you pay into your pension. 

After you've answered all the questions, you'll be presented with mortgage deals that should suit you best. It is then up to you to proceed to actually apply, which the online brokers will also help you with.  

Most online mortgage brokers are suitable for first-time buyers, although a couple specialise in remortgaging only. 

Will I be speaking to a bot?

Yes, but only at the early stages. In order to make them more user-friendly, most online mortgage brokers have online bots to answer generic questions while you are fiddling about with their comparison tool. The AI-powered stage of the process ends once you've had your mortgage deal results through; you will then be invited to speak to a real person, either via an online chat or over the phone. This is not only because speaking to a real person is reassuring, but also because this needs to happen for any application by you to be correct and legally binding. For that to happen, you have to have received actual advice, and algorithm results don't count as such in the eyes of the law.  

Will an online mortgage broker save me time?

Yes, without a doubt. Although putting your application together and getting it approved will still take time, the sophisticated algorithms online mortgage brokers use are very quick – just think of the time it would take to trawl through 90 different mortgage lenders yourself.  

How much do online mortgage brokers cost?

Online mortgage brokers typically advertise themselves as free, which means they get paid a commission from the sale of the property by the lender. While some conventional brokers operate in the same way, others will charge you a fixed fee upfront, or even a combination of the two, so using an online mortgage broker can allow you to avoid paying any upfront fees. Bear in mind, however, that using an online mortgage broker does not mean that you'll avoid any fees charged by the mortgage lender. 

Are online mortgage brokers whole of market?

Yes, unless otherwise specifically stated. This means that they have to compare deals from lenders representative of every segment of the mortgage market. In practice, online mortgage brokers have the ability to compare mortgages from as many as 90 different lenders. Some purposefully exclude major banks from this search process, with the rationale that most people using an online broker will want to see the alternatives to what their bank would offer them. 

Do I risk overborrowing with an online broker?

No: online mortgage brokers are regulated by the FCO in the same way conventional brokers are, and have to issue you with sound advice on your mortgage application. In other words, no one would sign off an unrealistic mortgage application, whether the research had been done by an online tool or the brokers themselves. How much can I borrow for a mortgage? Find out with our guide.

Comparing mortgages

See how it works for yourself; we've teamed up with the online mortgage brokers Habito: they offer the full service, from the online comparison tool (which you can use below), to looking over your documents, helping you find the best deal and even assisting with paperwork.