Using a broker

Michael White explains why now is not the time for a DIY mortgage

Many of us will be fairly comfortable doing the odd jobs around the home, whether that is putting some shelves up, giving the place a lick of paint or even tiling the bathroom. However, we would have to draw the line when it came to the major household jobs such as sorting out the electrics or installing a new boiler. For this type of work we recognise that we need a fully-qualified professional who has all the necessary training and qualifications to ensure the work is completed and the outcome is not just fit for purpose but also safe.

When it comes to the finance ‘jobs’ we need doing, and in particular the search for a mortgage, the same logic should apply. However, a number of people are looking to do it themselves when it comes to finding a suitable mortgage and this could leave them with a product which is not fit for purpose. Certainly, many of the bigger banks have headline-grabbing mortgage rates on offer at present but the fact of the matter is that most borrowers will not fit the bank’s criteria to get these loans and could end up with a product from the same source which is particularly uncompetitive when compared to the rest of the market.

Good to talk

The alternative of course is to use the services of a professional mortgage adviser. They will be able to gauge your financial circumstances and use this information to recommend a mortgage product based on your suitability and your needs. Plus, mortgage advisers have access to not just one bank’s mortgage products but the whole of the market available to them and therefore are not restricted to what’s on offer from one institution.

We should not forget that these are some of the trickiest and most difficult times for those seeking mortgage finance. A couple of years ago there were hundreds of lenders with many thousands of products all competing for your business. Times have changed and the credit crunch has put paid to this level of competition. Now, lenders are only looking to lend to those it considers the lowest risk; this means borrowers need significant levels of equity or a hefty deposit to get access to the best deals.

Currently, some lenders have products available at headline rates of 1.98% or 1.99% - these are very low rates and you might think they sound too good to be true and should be snapped up immediately. If you’re the right type of customer then this is true, however, many borrowers will not be suitable for this product. The lender may decide that you don’t have enough deposit or equity, you are not earning enough or you do not have a whiter than white credit record. Also, some of these headline products are only available direct from the lender; if you go into the branch to get one, not only will you in all likelihood end up disappointed but without question, the bank’s staff will attempt to ‘sell’ you another mortgage which may not be the right one for you.

Suits you

Using a mortgage adviser takes away the strain from the mortgage process. An adviser will know immediately if you are suitable or not for these best buy rates. He or she will save you time and money by searching the market for the top products you are suitable for, rather than you having to go to each lender individually. An adviser will also be able to do the sums for you – many products come with booking or administration fees which will add to the cost of the overall mortgage. Headline rates are just that and you will need an adviser to look at the overall financials to see if the mortgage does in fact make sense.

Of course, an added benefit is that some mortgage advisers supply their services for free so you will not even have to pay for the advice you receive. Plus, of course, mortgage advisers are fully regulated and have to be fully-qualified meaning you will gain all the protection you would expect from a business authorised by the Financial Services Authority.

There is nothing stopping you from being prepared and carrying out plenty of research into the mortgages that are currently available. However, only by using a fully-qualified mortgage adviser will you have peace of mind that all bases have been covered and that you have a specialist working on your behalf and in your best interest. Nobody wants to be left with a mortgage which was not the most suitable or competitive so using a professional will take away all the hassle of what is often the biggest financial decision you are likely to make in your lifetime.

Michael White is chief executive of online mortgage advisers Email Mortgages