A recent report indicated that many consumers with poor credit were becoming increasingly reliant upon mortgage brokers in order to find them a suitable mortgage deal, with many assuming that they will not be able to find a mortgage on their own due to their credit. Whilst it is more difficult to find a suitable mortgage if you have bad credit, particularly in the current financial climate, authorities are concerned that some may be a little too reliant on mortgage brokers.

Officials from the Financial Services Authority have expressed concern over the number of people with bad credit who are heading straight for the mortgage broker in order to find a mortgage rather than shopping around and looking at deals themselves. As many reports have indicated a huge number of lenders have withdrawn various mortgage deals over recent months, and this has affected groups such as sub-prime borrowers and first time borrowers in particular.

However, industry officials state that it is still important for consumers to shop around even if they are seeking a bad credit mortgage, as there is no guarantee that the broker will find you the most competitive deal for your needs and circumstances. FSA officials have said that in many cases those with bad credit are simply grateful to get any mortgage deal at all, and therefore do not bother to shop around for themselves, as many think that they will not stand a chance without a broker to help them.

The FSA also said that many bad credit mortgage customers are more interested in short term affordability than looking at affordability over the long term. Many were under the impression that the mortgage brokers would provide the best deals and reliable information regarding the risks of taking out the mortgage. Whilst the report also said that the main consideration for those with bad credit was to find the most affordable deal, it seems that many are not doing themselves any favours by failing to shop around.

Mortgage brokers can provide a valuable service for those with bad credit, as they have links and access to a wide range of lenders that deal with bad credit mortgages, enabling them to match the applicant’s details with the most suitable lender. However, each broker has access to a number of lenders but not all lenders, which means that consumers could still be missing out on a better deal elsewhere. This is why it is important for borrowers to do their own research into finding the best deal, even if they also get a broker on board.

However, bad credit consumers are warned that making multiple applications and receiving rejections from lenders could damage their credit further, so it is vital to check the eligibility criteria before making an application for a mortgage.

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