The prime responsibility of a broker is to get the buyer and seller together. They arrange transactions between the buyer and the seller and are paid a commission when the said deal is executed.
The financial world is incomplete without brokers; the term “broker” has been derived from an old French word “broceur” which means a small trader. The word ‘small’ is no longer true in the current scenario as, according to a 2004 study by Wholesale Access Mortgage Research & Consulting, Inc., there are approximately 53,000 mortgage brokerage companies that employ an estimated 418,700 employees and originate 68% of all residential loans in the United States. The remaining 32% is retail done through the lender’s retail channel, which means the lender does not go through a broker.
A mortgage broker’s work is to find a bank or direct lender that the individual (borrower) seeks with a particular loan. The scope of the mortgage brokers activities vary according to jurisdiction. In the United Kingdom, the mortgage broker has far more responsibility than the one in another jurisdiction as he is offering a regulated financial activity; the broker is responsible for ensuring the advice is appropriate for the borrowers’ circumstances and is held financially liable if the advice is later shown to be defective.
The work usually undertaken by mortgage brokers includes marketing to attract clients, assessment of the borrower’s circumstances which includes the credit history of the said borrower. Gauging the market to look for a mortgage product that suits the client’s needs, applying for lender’s agreement and all the related documents (payslips, bank statements etc.) are also duties that they undertake. In various instances, the mortgage broker has to explain the legality and the legal consequences of the said agreement to the borrower so that his client is aware of what he is getting into. Submission of the required papers and making sure that their client gets their value for money; these are the duties of the mortgage broker.
A financial broker is usually the predecessor to a mortgage broker, real estate broker etc. Everybody needs to borrow money at some point; a financial broker helps to arrange various loans for the borrower who seeks the broker out to help him in search of a lender (usually a bank). Their services include personal financial planning, life cover, serious illness cover, income protection, health insurance, savings, investments, pensions, retirement planning, business financial planning, inheritance tax planning, mortgages and commercial finance.
Finance brokers are especially helpful in guiding the borrowers with the technical, investment and taxation jargon which is very often used in the process and is extremely difficult to decipher. Financial brokers play an important part in simplifying this process for them. They discuss the options and help their client to come up with a financial plan according to the client’s needs and goals. Due to their research in the market for products for their clients, they have a fair analysis of the relevant market. For example, when it comes to life and pension products, there are eight companies active in the Irish market; financial brokers will generally deal with at least five of these eight companies, which help clients get market-wide advice from one source.
Hence, the importance and help of a broker in cases of mortgaging or simple financial advice is evident and with their help, the consumer get preference by the other party and better opportunities and openings in the market he is interested in.