What is an Independent Financial Advisor?

An Independent Financial Advisor (IFA) is a professional or group of professionals who provide independent financial advice to their clients and recommend specific products from the entire market (or specific segment of the market) in relating to their defined clients needs and financial situation. An Independent Financial Advisors qualification must be recognised by the Financial Conduct Authority (FCA) and they should show you a copy of their certification when asked.

What do Independent Financial Advisors Do?

Independent Financial Advisors are not tied to a specific product, company or brand, this means they operate subjectively, looking at and reviewing all financial products with a view to identifying the most appropriate deal for their clients.

When it comes to securing a mortgage, Independent Financial Advisors are excellently positioned as they are able to examine your holistic financial situation, provide a full financial appraisal and match you exactly to the right mortgage products and deals. Moreover, tey can support with mortgage preparation by advising on the best savings plans, investments and other finance products. Unlike Mortgage Brokers they are not limited to mortgage products, they can advice on all financial products and services.

Are all Independent Financial Advisors the same?

Short answer - NO. Whilst all Independent Financial Advisors must be qualified, the range of products depends on how they are employed:

  • Employed by Estate Agent: Will most likely provide a range of mortgage products that the estate agents prefer. Whilst the range may be wide, it may be more selective, depending on the rates/agreements that the estate agents agree with mortgage lenders.
  • Self Employed: Self employed or dedicated Independent Financial Advisor companies typically provide the widest choice of financial and mortgage products. It is in their interest to provide the best deals for home buyers as their service is their product, if it wasn't financially viable they wouldn't be in business. You are also more likely to access mortgage deals that are not available on the high street, certain Independent Financial Advisors leverage their weight to negotiate mortgage deals that are advantageous to their clients. They can also use the same technique to provide you access to other financial services and packages in addition to your mortgage where as Mortgage Brokers are limited to mortgage products only.
  • Why should I use a Independent Financial Advisor?

    A big advantage of Independent Financial Advisors is their access to all mortgage lenders and other financial products. Independent Financial Advisors can also advise you on the most suitable type of mortgages based on your need and financial situation. In addition, they can examine your holistic finances and identify other opportunities to improve your wealth or reduce your costs. Also, Independent Financial Advisors are involved in mortgages and financial products on a full-time basis, they understand the lending criteria of different mortgage lenders so can guide you and avoid any unnecessary delay or pitfalls. This way, you can apply to a mortgage lender who is best suited to your specific situation and avoid any unnecessary rejections.

    What is better, a Mortgage Broker or an Independent Financial Advisor?

    This is a common question we are asked. The reality is that they are both well positioned to provide you sound advice on mortgage products. Mortgage Brokers tend to be more focused on mortgages so do tend to find the better deals (though not always), they are however limited to dealing with mortgages. Independent Financial Advisors (IFA) are however qualified to provide financial advice on a range of products, this may suit your needs better. An IFA is normally a better choice if you are self-employed as they can offer broader financial advice about your other financial interests and will have access to mortgage lenders with a wider portfolio including those who target company directors, contractors and so forth.

    How do I know if an Independent Financial Advisors is good?

    Check if the Independent Financial Advisor has access to all deals

    Before shortlisting an Independent Financial Advisor, you need to check if the Independent Financial Advisor has access to all lenders in the UK. You may get one of the three responses listed below:

    1. The Independent Financial Advisor may say no because they may be tied to a specific lender or a small group of lenders. This means they will have access to only a few deals and may lose out on other attractive deals.
    2. The Independent Financial Advisor may say they have access to all deals available to all Independent Financial Advisors. This means they will exclude any deals directly available to the general public as they may not be able to earn a commission on such deals.
    3. The Independent Financial Advisor may say they have access to all lenders. While it's practically impossible to check all deals and mortgages on offer in the UK, such Independent Financial Advisor can provide you with a wider range of options as opposed to the earlier two.

    Based on the responses you can decide whether you want to deal with the Independent Financial Advisor or not.

    Ask the Independent Financial Advisor about fees

    Upon shortlisting, you need to check if there is a fee for using the Independent Financial Advisor's services. Independent Financial Advisors make money either through a commission from the lender or by charging a fee to the borrower.

    Independent Financial Advisor Commission

    Most lenders pay a 'procuration fee' to the Independent Financial Advisor, which is typically 0.35% of the loan amount. The higher the loan amount, the greater the commission to the Independent Financial Advisor. You should note this is a transaction between the lender and Independent Financial Advisor, and it doesn't affect your borrowing costs.

    Independent Financial Advisors are legally obligated to inform borrowers about how much commission they are going to charge the lender. You can find this information in the Key Facts illustration.

    Independent Financial Advisor Fees

    Some Independent Financial Advisors may charge a fee to the borrowers. This could be in addition to the commission earned from lenders. Independent Financial Advisors offer the borrowers a choice between a fee and a commission.

    Most Independent Financial Advisors will charge a fee of around 1% of the loan amount. Stay away from Independent Financial Advisors who charge more than 1%. Also, avoid Independent Financial Advisors who are ask for a fee prior to the transaction because you may end up paying even if your deal doesn't materialise.

    You should also check if the Independent Financial Advisor has the necessary qualifications for advising. CeMAP (Certificate in Mortgage Advice and Practice) is the most accepted for mortgage brokers, your Independent Financial Advisor should have an equivilant to provide mortgage advice. A qualified Independent Financial Advisor will understand the requirements and eligibility of the borrower in detail and advice only on the most suitable products. Going to a qualified Independent Financial Advisor can reduce the borrower's risk. If a qualified broker provides you with incorrect advice, you can complain to the Financial Ombudsman, and they will perform an investigation on the broker.

    Some examples of independent mortgage advisors are Mortgage Advise Bureau or John Charcoal. London & Country mortgages doesn't charge a fee to the borrowers and has access to all deals, which are available only to brokers and not to the general public. You can also check websites like for a list of mortgage brokers.

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