Mortgage Advisors advise people and companies on which mortgage is most appropriate for them.
Mortgage advisors are responsible for advising their clients on the best mortgage for their particular circumstances.
Being a mortgage advisor will involve ‘selling’ FSA regulated products and, as such, you have a duty of care and obligation to offer the best advice to your clients.
Mortgage advisors can offer products from a single provider (i.e. just one institution), work on a multi-tied basis(where they offer products from several providers) or offer products from the whole of market (meaning that they offer products from all or the majority of providers).
Mortgage advisors may advise on a range of products including buy to let, residential or commercial mortgages.
They may also advise on a range of different products including:
- Capped – A mortgage product that will not increase above a certain percentage.
For example “capped at 4%” would mean the rate could never be above this.
- Collared – A mortgage product that will not fall below a certain percentage.
For example “collared at 4%” would mean the rate could never be below this.
This gives the lender financial security but may allow them to offer a slightly better rate.
- Discounted – When a mortgage is set at a specific % below the lender’s Standard Variable Rate (SVR) e.g. if the lender has an SVR of 7% and the discount is -2% you would actually pay 5%.
- Flexible – A mortgage with special additional features e.g. paying more or less than was initially agreed, making lump sum payments (overpayments), temporarily stopping payments (payment holiday).
- Islamic Mortgages – Under the law of the Koran, the charging of interest is forbidden.
There are special types of Islamic mortgage to circumvent this problem.
The two most common are Ijara under which the bank buys the property for the client and the client then leases it back from the bank, making monthly payments and Murabaha where the bank buys the property and the client then buys it immediately back for a higher price, paying off the debt over a specified term e.g. 15 years.
- Let to Buy – Otherwise known as shared ownership. Involves buying only part of a property and paying rent on the remainder.
These allow some people, otherwise unable to do so, to get a foot on the property ladder but are surprisingly uncommon.
- Lifetime Mortgages – A means of older homeowners releasing money from their property.
Normally called home reversion or equity release schemes, there will be no monthly payments or fixed repayment date.
However, the lender will expect money back when the house is sold, reducing any potential inheritance or money available to buy a new house.
You will need special qualifications to advise on this type of product.
- Offset – A mortgage run side-by-side with a bank account.
The way it works is as follows: cash in your bank account does not receive interest but the amount of interest you pay on your mortgage is also reduced.
E.g. if your Mortgage was £150,000 and you had £50,000 in the bank you would only pay interest on £100,000 of your mortgage.
- Right-to-Buy – Allows tenants in council houses to purchase their homes with a large discount to intrinsic value.
- Self-Cert – Often used for self-employed people, this means a lender agrees that the applicant can confirm their own income rather than providing all the necessary evidence i.e. P60, payslips, accounts.
- Self Employed – Mortgage Advisors are often remunerated on a commission basis.
Rather than charging their clients a fee the mortgage provider e.g. Lloyds, Halifax or RBS provides a certain % sum of the loan to the adviser.
These are normally in the region of 0.1%-0.4% for most providers.
However, if the mortgage is more complex e.g. for a sub-prime borrower, these fees can increase substantially and may be as high as 2%.
Some mortgage advisors choose or offer their clients the ability to have any commission rebated.
In these cases advisors will normally charge a fee for their services of between £495 to £3,000.
A successful mortgage broker with a large portfolio of clients can thus earn in excess of £100,000 p.a.
- Employed – Trainee advisors should expect a salary in the region of £12,000 – £16,000 increasing to £20,000-£45,000 OTE.
Employers may also offer comprehensive benefits packages such as pensions or life insurance.
- Attention to detail.
- Strong presentation skills.
- Acute listening skills – clients may not understand their needs and you need to be able to ask focussed questions in order to ascertain their needs.
- Negotiation skills – to speak to mortgage providers and their underwriters.
- Technical knowledge of the mortgage industry and specific areas.
- A knowledge of technical terms related to your field.
- Good numeracy and literary skills.
- A working knowledge of computers and computer programmes such as Excel and Word and also specialist programmes.
- The ability to work to a deadline.
- Excellent interpersonal, customer care and communication skills.
You will be responsible for:
- Meeting with clients to assess their financial circumstances including completing factfinds.
- Sourcing a mortgage, sometimes using specialist software such as Mortgage Brain or Trigold.
- Speaking with lenders to find out whether certain conditions can be met, or whether products are still available or liable to change.
- Advising clients on what mortgage is appropriate for their circumstances.
- Completing application forms for their clients.
- Calculating rental yields and criteria for buy to let properties.
- Speaking with lawyers, conveyancers, and estate agents to confirm details of a mortgage.
- Making sure that documentation is properly witnessed and signed.
- Looking after your client’s affairs in an orderly and compliant manner. Mortgage Advisors may be inspected by the FSA without notice so having systematic documentation is imperative.
- Keeping records of when mortgage deals expire and contacting clients to minimise their long term costs.
- Keeping abreast of developments in relevant legislation and macro-economic events.
A Mortgage Advisor needs to pass one of several recognised qualifications in order to sell regulated products.
The full list of relevant qualifications is published by the Financial Services Skills Council (“FSSC”).
You will be expected to have 5 GCSE’s at A to C and employers will often require a B or higher in Maths and English.
You will then need to pass one of the following before you can practise:
- CII Certificate in Mortgage Advice – provides an introduction into FSA regulation as well as fundamentals on the house buying process, mortgage products, borrowers and their needs and repayment options.
The CII also offers a qualification in Equity Reversion and Home Reversion.
- iFS CeMAP – covers relevant FSA regulation and similar areas to the CII Certificate in Mortgage Advice.
It is possible to join banks and financial institutions straight after school or university through work or graduate programmes.
Mortgage Advisors will normally work from an office but, unlike other professions, they are likely to spend a lot of time at their clients’ homes.
Normal office hours will apply but you may be expected to meet with clients after work.
- Banks – Most banks will have mortgage advisors employed in branches advising on bank specific products.
- Insurance Companies – Insurance companies will often offer financial advice to their clients including advice on mortgages.
- Self Employed/ IFAs/ Financial Advisors There are also a lot of small IFAs in most areas who may offer mortgage advice or employ mortgage advisers.
Mortgage Advisors may look to move into offering financial advice in other areas such as insurance, investments or pensions.
In order to do so they will need to study for further qualifications such as the CII Diploma in Financial Planning (DipPFS).
Employed advisors may also be promoted to become sales managers or area sales managers looking after a team of mortgage advisers.
Also known as…
- Mortgage Sales Manager
- Mortgage Broker
What’s it really like?
James Cameron – Former Mortgage and Financial Advisor at St. James’s Place Partnership
How long have you been in this job/ industry?
I’ve now been working in finance for 5 years.
I started out advising clients on mortgages after graduating from university and am now a Business Analyst.
What did you do in a typical day at work?
I used to get to work at 9 a.m and check my e-mails for any developments that might have come in.
I would then review the current progress of all our clients’ mortgages.
I was able to offer products from the whole of market meaning that we could advise our clients on mortgages from every institution.
Most mortgage companies we deal with have incentive periods i.e. periods where the mortgage rate is lower than the lender’s Standard Variable Rates.
Incentive periods are normally between two years and five years and so in order to ensure that clients were not paying over the odds we used to keep a database of all clients’ current deals so we could contact them when their current deal was close to expiry.
Each day I would normally have at least 5 or 6 documents arrive from clients – signed application forms and the like – and around ten pieces of information come in from mortgage providers.
My day was normally split between speaking with clients, sourcing mortgages and doing analysis to see which was the most cost effective or appropriate for the client, preparing application forms and supporting Know Your Client (“KYC”) documentation – identification, confirmation of pay, proof of address etc – and speaking with lenders.
For new clients the interview process is normally longer than for existing clients as you have to ascertain a range of factors – salary, existing commitments, other assets, financial dependents etc.
For new clients we also used to use Letters of Authority, signed by the client, and write to their existing mortgage provider to confirm full details of their mortgage.
What do you like about the job?
I enjoyed speaking with clients.
At the end of the day you are facilitating the most important purchase that most people make and it is very fulfilling to help someone buy a house.
What do you dislike about the job?
I spent considerable amounts of time filling in application forms.
You also get clients who are rather impatient.
What advice would you give to someone thinking of doing this job?
It’s imperative that you have the client’s best interests in mind, you need to be thorough and have a keen eye for detail to ensure that a mortgage application runs smoothly.
What job(s) do you think you might do after this role (i.e. career progression)?
I took all of the CII Financial Planning Certificate exams and spent 3 years advising clients on investment, inheritance tax and pension issues.
I then moved into the City and now advise large institutional clients on how to invest their assets.
I’ve gone from advising people on £100,000 mortgages to advising investment banks on billions of pounds.
What other inside-information can you give to help people considering this career?
Being a Mortgage Advisor does provide you with a lot of flexibility and you can often build a career around your family.
It can be very well paid but you need to be able to source your own clients.
It is likely that regulation of financial professionals will increase in the future, especially in light of the recent economic difficulties.
Being a self-employed advisor does not always provide a consistent income.
For example, during the recent financial crisis the number of people buying houses and re-mortgaging and the capital available from lenders has reduced substantially, meaning that the role of the advisor has become harder.