Why use a broker?

Jamsyke

All the advice I've read in Martin's articles and on the forum seems to suggest that using a broker is a must. I can understand the possible benefits but I'm confused why this advice is so extreme. Martin used the word "nightmare" referring to dealing direct with banks and building societies.

There appears to be various comparison services which can give you an indication of what a competitive rate is for the type of product you're after.

Therefore it seems logical to contact my existing mortgage provider (Woolwich) to find out what they can offer. I would also contact Alliance & Leicester as I have existing accounts with them and the Nationwide to get a good comparison.

If I know that I want a 3 year fixed with overpayment options, sensible penalty charges and sensible arrangement fee and I know what a competitive rate is then why am I likely to sign up to a "bad product"?

I'm not dissing the brokers, I'm sure they offer a good service, I'm just trying to understand why my way is wrong according to most of the advice I've read.

dunstonh

There appears to be various comparison services which can give you an indication of what a competitive rate is for the type of product you're after.

Which are not as detailed as the "Paid for" research tools of mortgage advisers and usually nowhere near as detailed.

Therefore it seems logical to contact my existing mortgage provider (Woolwich) to find out what they can offer. I would also contact Alliance & Leicester as I have existing accounts with them and the Nationwide to get a good comparison.

Thats three you are checking out. Compare that to the hundreds a mortgage adviser will be able to check out.

I'm not dissing the brokers, I'm sure they offer a good service, I'm just trying to understand why my way is wrong according to most of the advice I've read.

I dont think the article is that strong but why do it yourself when there are loads of fee free advisers out there that can do all the work, all the admin, verifications, chasing etc and carry the liaiblity for the advice they are giving. It can cost you nothing to use an adviser so you have nothing to lose and everything to gain.

mleonard79

Jamskye,

I think the last point Dunstonh makes is the most important one - the brokers are fees free and therefore you have nothing to lose by consulting them!! (I'm not a broker by the way or related to one in any way so I'm totally impartial.)

Even if you know exactly what you want brokers may have exclusive deals and agreements with certain institutions that you won' t be able to find yourself and they'll certainly be able to do more detailed searching for the best deal on your behalf.

I think this is the reason Martin feels it is a must to consult a broker before making your final decision because at the end of the day it costs you nothing and you get an expert to help you through the whole process.

I knew what I wanted and to be honest the broker I talked to couldn't find a better deal than the one I had sought out myself but what he did do what sort out the whole application for me, get me a good local surveyor at a good price who did the job within a day, dealt with all the solicitors and talked to the bank on my behalf - the mortgage was sorted out in super quick time and with the minimum of hassle. I feel that's not bad for no fee. I guess it's a personal preference though and it's up to everyone to decide for themselves. The only reason I could think for someone not going to a broker being the right idea is if they are exceptionally clued up about mortgages and want to go through mortgagegenie to get the commission for the mortgage for themselves but to just go to the high street banks yourself will not get you a better deal or more cashback than getting the broker to do it for you so I'd personally plump for the free help. Just my preference.

Regards

Michelle

homer_j_3

You have also to bear in mind that getting the best mortgage does not necessarily mean you getting the mortgage with the lowest interest rate.

An example of this maybe:

4.24% 2 yr fixed with Lender A v 5% 2 yr fixed rate with Lender B

Which one is the best mortgage? Lender A, right?

Well if I was to then say lender A has a £1500 arrangement fee and Lender B had a £400 one - which mortgage is better for you?

Lender B, right?

What if your mortgage was £250k rather than £80k? There may be room for scope to make sufficient savings to warrant Lender A!

You then have to look at overpayments, You may want to pay the equiv of 20% a year? Lender A charges Daily interest but Lender B charges Annual interest - so you want lender A?

Well lender A will only allow you to make 10% overpayments where as Lender B will allow upto 25%

You then discover after you have decided on which product/lender you want, you discover that they both have an early repayment charge of 3% for 3 years which ties you in beyond the fixed rate period.

I wont go on but hopefully you can see that the rate can have very little to do with what is the best product for you - or the cheapest!

Oddgy

Homer - You are very good at this!!!! Point made extremely well - well done!

homer_j_3

you must feel for my clients lol

mleonard79

yes very well explained homer and an excellent point - the best rate doesn't necessarily mean the best mortgage for the individual circumstances involved. For example in our case we didn't go for the best rate, we went for the best no fees mortgage with the most flexibility as these were the most important things for our circumstances (only 5 years to go so lower rates with high fees were a no-no and want to be able to overpay whenever we can without restrictions) and this will save us more overall even although there were much better rates so to speak. It is all very subjective and talking to someone who specialises in this who can often seek out the best mortgage in terms of its suitabilty for your circumstances and not just in terms of the lowest rate is really a very good idea.

Regards

Michelle

dunstonh

homer, that is an excellent post.

Those of you that follow the savings and investments forum know the FSA tables are often referred to as a source of information. However, the information they present is based on investments upto £25,000. Certain products offer rubbish charges at that level but can kick in with really competitive rates at £100,000. The tables dont show that though. There are a number of mortgages that have better terms with different lending criteria and amounts borrowed. So the same applies with mortgages as well.

AndrewSmith

Homer Mate,

Just about sums it all up.

Top post my friend.