A recent study conducted by Hodge asked portfolio buy-to-let landlords and brokers for their opinions about finding the best loan. The new research from mortgage, lending, and savings specialist Hodge, concludes that many buy-to-let landlords choose brokers for the best loan, as opposed to direct lenders.
When funding big investments, such as the purchase of a property, choosing the finance method is an important part of the process. A mortgage broker acts as a middleman who helps the consumer identify the most suitable lender, while a direct lender is a bank or other financial institution that decides whether the consumer qualifies for the loan.
The reason why brokers appeal more than direct lenders
Some 71% of investors with portfolios of between £2 million and £50 million stated that opting for a broker saved them money and provided them with a deal they were pleased with.
Mike Clifford, head of commercial propositions at Hodge, said: “Our research shows borrowers clearly value the support of a broker to find them the best deal and trust them to find a lender that suits their needs. With so many borrowers putting their trust in brokers to find them a loan that suits them, brokers are seen as a key link between lenders and investors – with the added benefit of removing frustrations for landlords.”
Though mortgage brokers and direct lenders both provide services to people seeking mortgage loans. Approximately 73% expressed they prefer to use a mortgage broker while only 27% go directly to lenders. This is nearly three-quarters of portfolio buy-to-let landlords.
The challenges brokers help overcome
Hodge’s research also discovered that 40% of buy-to-let landlords use a broker because researching suitable mortgage products is a challenging task. Meanwhile, 35% found interest rates frustrating, 35% found the lack of clarity over charges the main issue while 31% found the mortgage/ loan underwriting aspect the challenge.
Clifford adds: “The residential market is still very buoyant and many buy-to-let landlords are on the lookout for new properties to add to their portfolio. When it comes to lenders they want flexibility, speed and efficiency, something we strive to achieve here at Hodge.”