Broker-only mortgage lenders: when you can't apply direct

Some mortgage lenders never take an application directly from the person borrowing the money. They only accept applications that come through a mortgage broker or adviser, and if you approach them yourself they will point you back to an intermediary. These are known as intermediary-only or broker-only lenders, and they sit alongside the familiar high street banks and building societies that will deal with you from first enquiry to completion.

For most borrowers this never becomes an issue, because most mortgages are available either way. You can apply for a mortgage direct to a building society or other type of lender, or use a regulated mortgage broker to help you¹. But the split matters at the edges of the market. Which? notes that with interest-only mortgages, some deals are only available through brokers², and some lenders sit at one extreme entirely: first direct mortgages are only available from the lender, while others are only available through brokers³. Knowing which lenders sit where, and what a broker can reach, is part of working out your realistic options.

Why some lenders only work through brokers

A lender that works only through intermediaries has chosen a distribution model, not a different kind of mortgage. The mortgages it sells are regulated in the same way as any other, and once the loan completes your relationship is with the lender: you pay it, it sends your statements, and you contact it if anything goes wrong. What is different is the front door.

The reasons are practical. A lender serving complicated cases, where each application needs human judgement, can be more efficient if every case arrives packaged and checked by a broker who understands its criteria. It does not need branches, call centres or a public-facing application system, and it does not spend money marketing to people whose cases it would decline. The broker does the filtering. The same logic appears elsewhere in financial services: MoneyHelper notes that if your circumstances are complex, out of the ordinary or you are insuring something unusual, you might want to use a specialist broker rather than a standard one⁸.

The mirror image also exists. Some lenders are direct-only: first direct mortgages are only available from the lender, not through brokers³. So the market runs on two axes at once, with some deals reachable only direct, some only through a broker, and most through either. Which? makes the point plainly for interest-only mortgages: you can apply direct through a lender or through a mortgage broker, and some deals are only available through brokers². The Building Societies Association gives the same framing for the market as a whole: you can contact the building society directly, or speak to an independent mortgage adviser, to see what is most suitable for your needs⁹.

For a borrower, the practical consequence is that the full range of mortgages is not visible from any single vantage point. A lender's own website shows only its own deals, and a broker shows only the lenders on its panel. Neither view is the whole market, which is why the next section matters.

Specialist lenders and the borrowers they serve

Broker-only lending overlaps heavily with specialist lending, though the two are not the same thing. A specialist lender is one that focuses on cases the mainstream high street declines or prices heavily, and many of them choose to distribute only through brokers because their cases need that human packaging.

The clearest example is credit history. Which? explains that if you have marks on your credit history, you may need to get a mortgage from a specialist lender¹⁰. Specialist lenders tend to be more flexible when assessing your mortgage application, but they often charge much higher rates and require larger deposits⁵. The trade-off is direct: a route to borrowing that a high street lender would refuse, in exchange for a more expensive mortgage and a bigger deposit. The dedicated guide to getting a mortgage with bad credit covers this route in detail.

Several other circumstances push borrowers towards the specialist end of the market:

• Self-employment and irregular income. It can sometimes be harder to secure a mortgage if you are self-employed¹⁰, and lenders that understand these income patterns are often specialists.
• Older borrowers. A retirement interest-only mortgage is defined in the FCA Handbook as one whose entry is restricted to older customers above a specified age¹¹, a product area served largely by specialist and later-life lenders.
• Unusual property or transaction types. Let-to-buy, where you rent out your current home to buy another, is a niche where even the solicitor requirements vary: some lenders require the same solicitor for both transactions, others do not¹².
• Complex ownership situations. After economic abuse, a survivor may find they do not meet the lender's affordability criteria for a mortgage in their sole name¹³, and specialist lenders assess these cases individually.
• Narrow product areas. Not many lenders offer offset mortgages, so choice can be limited¹⁴, and the few that do are not all reachable direct.

Buy-to-let is its own specialist territory. The Mortgage Charter's commitments do not apply to buy-to-let mortgages¹⁵, and lenders' treatment of existing customers who want to rent out their home varies: some will grant a consent to let on the current deal, while others may insist on switching to a buy-to-let mortgage¹⁶. The guide to buy-to-let mortgages covers that market separately.

The common thread is that specialist lenders price and decide case by case, which is exactly the work brokers do. That is why so many of them are intermediary-only, and why a borrower with any of these circumstances usually ends up needing a broker whether or not they wanted one.

Brokers do not all reach the same lenders

A broker can only search the lenders it has a relationship with, its panel, and panels differ widely. One broker, Alexander Hall, is described as a direct mortgage broker with access to 120 lenders³. L&C Mortgages has access to thousands of deals from over 90 different lenders across the market⁴. Those are two well-known firms, and even between them the panels are not identical: a lender on one list may be absent from the other.

The differences are not only in numbers. Some brokers focus on the mainstream. Which? notes of one online broker that the mortgages available are good for standard borrowers but may not be suitable for specialist lenders or those with bad credit scores⁴. A borrower with a complicated case could therefore be told "no lender will accept you" by a broker whose panel simply contains no lender for that case, while another broker with a specialist panel could find options. The first answer is about that broker's panel, not the whole market.

Online-only brokers add another layer. They enable you to carry out most of the mortgage comparison and application process online and do not give borrowers the choice of going into a physical branch or office⁴. That suits straightforward cases, but there will still be paperwork to go through, and human mortgage brokers will always be used at some point in the process to make sure your application is correct and legally binding⁴. The choice between an online-only broker, a telephone broker and a face-to-face adviser is covered in the guide to mortgage advice: brokers, advisers and applying direct.

Underneath all of this sits a simple rule: it is up to mortgage lenders to set their own policies about whether they will accept a mortgage application⁷. A broker's recommendation can only ever be as good as its panel, which is why asking a broker which lenders it can reach, and whether it covers the whole market or a restricted panel, is one of the most useful questions you can ask before starting.

How an application goes through a broker

The process is the same in shape whether the lender is broker-only or not: the broker gathers your circumstances, searches its panel, recommends a deal, and submits the application. What changes with a broker-only lender is that there is no alternative route, so the broker's handling of your case matters more.

Two points in that flow deserve emphasis. First, the credit check. When you give permission, the lender can have full access to your credit file in the same way it could if it were you applying for credit, and if you are financially linked to someone else, for example through a joint account, that link is part of the picture the lender sees. Not all lenders report to credit reference agencies, and some lenders may only report to one or two of them⁷, so your credit file may look different depending on which agency a lender checks.

Second, the decision. Each lender applies its own criteria to affordability and to the property, and the FCA's responsible lending rules in MCOB 11 apply to the mortgage lender as a firm for the whole chapter¹⁹. The broker prepares and submits; the lender decides. If the property is down valued, the guide to challenging a mortgage down valuation explains what can be done, and the guide to mortgage valuations and surveys explains what the lender is actually checking.

One situation shows how the broker route and the direct route interlock even mid-mortgage: porting. When you port a mortgage you have to reapply for the deal, and the lender will use its current lending criteria to decide whether to let you port²⁰. A deal you originally reached through a broker is reassessed by the lender directly at that point, on the lender's own terms. The guide to porting a mortgage when you move home covers that process.

Broker fees and what to ask before you start

Brokers are paid in two main ways: commission from the lender when the mortgage completes, and fees charged to you. Many brokers charge nothing and live on commission alone, but some charge a fee, and the amounts and timing vary between firms, so the question has to be asked before you commit.

You are entitled to clear answers, because the rules on disclosure are explicit. Credit brokers must tell you that they are a credit broker and not a lender⁶. The Financial Ombudsman Service sets out what it would usually expect a credit broker to provide, which includes whether they are a broker or a lender, their legal name, the fees to pay and when and how, the details of the loan offered, and whether details might be passed to other companies²¹. That list is a ready-made set of questions for a first conversation with any broker.

There are also rules protecting you from certain charging practices on the mortgage itself. Under the FCA's rules, a mortgage lender may not offer a regulated mortgage contract on the basis that fees or charges of any kind are automatically added to the sum advanced²². Broker fees are separate from this, but the rule shows the boundary the regulator draws: charges must be explicit, not silently folded into the debt.

A few points worth checking before you start:

• Whether there is a fee at all, and whether it is fixed or a percentage of the loan.
• When it becomes payable, and whether you still owe it if the mortgage falls through or you change your mind.
• How the broker is paid otherwise, including whether any lender pays it more than others.
• What its panel covers, whole of market or restricted, and whether it reaches the specialist lenders relevant to your case.
• Whether you are getting advice or an execution-only sale. The FCA's rules recognise that a customer may reject advice given by a firm and instead enter into a different regulated mortgage contract as an execution-only sale²³, which shifts responsibility for the suitability of the choice towards you.

If something goes wrong with the advice itself, there is a complaints route. National Debtline's guidance on complaining about your lender explains how to raise a complaint and escalate it²⁴, and the guide to complaining to the Financial Ombudsman about your mortgage covers the final step. One legal backstop does not usually reach mortgages: the unfair relationships rules cannot usually be used for regulated mortgage contracts, which include first charge mortgages and secured loans²⁴, so complaints rest on the regulator's framework and the ombudsman rather than that route.

When the answer is no from every lender

A refusal is not always the end of the road, but it is worth understanding what a refusal actually means. It is up to mortgage lenders to set their own policies about whether they will accept a mortgage application⁷, so a refusal means that lender's policy does not fit your case at that time. It does not mean no lender would ever lend, and it does not put a permanent mark on your file.

Some things on your file do, though, close doors. The Financial Ombudsman Service describes the consequences of fraud markers: customers may find they cannot open a bank account, their bank account is closed and they cannot open another one, or their mortgage application is rejected²⁵. A fraud marker is a serious entry, and if you believe one is wrong, the ombudsman can look at how it was applied.

Other refusals are policy choices with workarounds. Some lenders will refuse to allow you to pay interest only if your mortgage is already in arrears²⁶, which matters if you were seeking reduced payments because of difficulty. The FCA also sets a hard boundary on repayment plans: a mortgage lender must not accept speculative repayment strategies for interest-only mortgages¹⁹. So a broker cannot talk a lender round on either point; both are matters of lender policy or regulatory rule.

Two further situations can leave borrowers stuck rather than refused:

• Closed books. Some lenders do not offer new mortgages or new interest rate products to existing borrowers. This is called a closed book, and borrowers with such lenders are known as mortgage prisoners²⁷. The guide to mortgage prisoners and modified affordability covers what has been done for them.
• No route to any lender. If no lender will accept you, free help exists. Debt advice charities can talk through your options, and some charities will only accept applications for help through an intermediary or support worker who applies on your behalf²⁸. Shelter's guide helps those who cannot pay back what they owe and are near the end of an interest-only mortgage term, or whose term has already ended²⁹.

Support with housing costs has its own boundaries. If you used part of your mortgage for other purposes, for example debt consolidation by remortgaging, you cannot get help with that part of your loan³⁰. The guide to mortgage arrears covers what to do when payments become impossible, and the guide to what to do if you cannot pay your mortgage is the practical starting point.

Where going direct is still an option

Even in a market with broker-only lenders, the direct route remains open for most borrowers and for most of the life of a mortgage. You can apply for a mortgage direct to a building society, or other type of lender, or use a regulated mortgage broker to help you¹. The Building Societies Association's advice is the same: contact the building society directly, or speak to an independent mortgage adviser, to see what is most suitable for your needs⁹.

Once the mortgage exists, everything runs direct regardless of how it started. If you think you will have difficulty paying your mortgage, contact your lender as soon as possible³¹. Lenders may be able to reduce your payments for a period or alter the way your mortgage is paid, for example to interest only³². Options could include moving to an interest-only loan, taking a mortgage payment holiday, or extending the term of the mortgage³³. The guide to mortgage terms and extending your mortgage term covers one of those in detail.

Product transfers, where you switch to a new deal with the same lender, are also a direct transaction between you and your lender, with no broker involved. The comparison between that and a full remortgage is set out in the guide to remortgage or product transfer.

The direct route has limits worth knowing. It shows you one lender's deals only, and that lender will not tell you whether a better option exists elsewhere, because it cannot see elsewhere. A broker's panel view and a lender's own view are two partial pictures of the same market, and the guide to how to apply for a mortgage walks through both.

Remortgaging later: the route can change

The route you used first does not bind you later. When you remortgage, you are free to switch between the direct and broker routes, and many borrowers do: a case that needed a specialist, broker-only lender at the outset may fit a mainstream lender's criteria five years later, especially where credit marks have aged off the file.

The rules also allow more change at remortgage than many borrowers expect. Under the FCA's rules on remortgaging with the same or a different lender with no additional borrowing, the mortgage does not have to be exactly like-for-like. The borrower can extend the term, consolidate first and second charge regulated mortgage contracts (but not unsecured loans unless they are linked borrowing), move from interest-only to repayment if that is more affordable, or change interest rate type³⁴. So a remortgage can be a restructuring, not just a rate swap.

Moving the other way, onto interest-only, is tightly controlled. A mortgage lender may only enter into an interest-only mortgage, or switch a repayment mortgage onto an interest-only basis, if it has evidence of a clearly understood and credible repayment strategy with the potential to repay the capital borrowed and any interest reasonably expected to be accrued³⁵. The guides to repayment vs interest-only and interest-only repayment strategies cover what lenders accept.

Interest roll-up is barred almost entirely: a mortgage lender may not enter into an interest roll-up mortgage, or vary an existing regulated mortgage contract so that it becomes one, unless it is a lifetime mortgage, a bridging loan, a loan to a high net worth mortgage customer, a loan solely for business purposes, or a shared equity credit agreement³⁶. The guide to remortgaging covers the process end to end, and the guide to early repayment charges covers the cost of leaving a fixed rate early, which is often the deciding factor in whether remortgaging is worth it.

Protection once you have the mortgage

However the mortgage was reached, through a broker or direct, the protections afterwards are the same, because they attach to the regulated mortgage contract and to the lender, not to the route you took.

The lender has ongoing duties. For interest-only mortgages entered into on or after 26 April 2014, a mortgage lender must carry out a review, at a minimum once during the term of the mortgage, in which contact is made with the customer to check that the customer's repayment strategy is still in place¹⁹. The review is not required where, despite reasonable efforts to contact the customer, the mortgage lender has been unable to do so¹⁹.

If payments become difficult, help is structured across the UK. If you are having problems with your mortgage you could get help from your lender if it has signed up to the Mortgage Charter³⁷, whose commitments apply to regulated residential mortgage borrowers but not to buy-to-let mortgages¹⁵. In Wales, official guidance is to contact your lender as soon as possible if you think you will have difficulty paying³¹. In Scotland, creditors must follow pre-action requirements before applying for possession, and an application for possession will be competent in defined circumstances, for example if the debtor cannot meet a shortfall not covered by an insurance policy or support scheme, or the application for support is refused or not decided within a reasonable time³⁸.

A temporary switch to interest-only payments means you just pay the interest on your mortgage, without repaying the loan itself, for a set period of time³⁹, though as noted above some lenders refuse this if the mortgage is already in arrears²⁶. If redundancy is the trigger, your options could include moving to an interest-only loan, taking a mortgage payment holiday, or extending the term³³.

After the worst outcomes, the rules still run. If your home was repossessed and sold, and the lender pursues you for a shortfall, there are time limits: National Debtline provides a letter for use where your house was sold more than six years ago and you were first contacted by the lender after 11 February 2000⁴⁰. The guides to mortgage repossession in England and Wales, repossession in Scotland and the mortgage shortfall after repossession cover these stages, and free, impartial help is available from National Debtline, StepChange and Shelter throughout.