by Mark Johnston
The invent of the internet and subsequent price comparison websites have in recent times taken the place of brokers.
Recently the Council of Mortgage Lenders (CML) revealed that mortgages are at a ten year low. To attract new customer, lenders are cutting out the middle men and offering their products direct to borrowers. This keeps rates lower for customers and provides the lenders with a lot more profit. This has created a conundrum for would be borrowers, do they visit a broker and get professional advice or hope for a cheaper deal and decide themselves?
Michelle Slade from Moneyfacts said: “The proportion of business done through brokers has dropped significantly in the last few years and this shows no sign of abating. In fact, many of the best mortgage deals are available direct from lenders rather than through a broker,”
The advantage of going to a broker is that they are able to provide expert advice, many borrowers don’t understand the different types of deals and how a mortgage works. Some deals are only available to brokers so aren’t offered direct to the public. Borrowers would need to visit a broker to be able to access some of the special deals offered by intermediaries.
The problem is that mortgage brokers can only offer mortgages that are available to them. Many of the larger lenders only offer their mortgages direct to their customers so deals from the likes of HSBC, First Direct and the Co-Op would not be available via a broker, at the same time these providers are topping the best buy tables so borrowers would loose out of the best deals.
Although brokers do recognise that the best deals may be missed, they do highlight other benefits. The most valuable one is being able to explain an offer and calculate the true cost of a loan. Borrowers could easily loose out and not get the best deal if they just opt for the top deals on the best buy tables. The way mortgages are built means that they cannot just be compared on rates alone.
David Hollingworth of London and Country mortgage brokers said: “A broker will not only factor in fees in establishing the best deal but also tailor the recommendation to fit the client’s circumstances.”
The best way of getting a deal is to do some research. Its worth looking at direct deals on the internet, and read mortgage news pages like www.mortgages.org.uk. At the same time borrowers should take advantage of getting some mortgage advice and visit a broker. They’ll be able to offer good advice and find the best deals available to them. Its then up to borrowers to decide which route to go down.
Michelle Slade said: “Going direct is usually better for borrowers with straightforward mortgages, such as those looking to remortgage, but brokers come into their own for non-standard mortgages, such as the self-employed, or those looking for their first home loan. If a borrower wants to ensure they have the best deal, then visiting a broker as well as researching direct deals is the best option.”
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