Choosing a mortgage
Getting 3rd Party Advice
Hopefully, you will use the number on this site and call
one of our advisors to arrange your mortgage. However, before
you do so, it may be worth reading about the different types
of advisors that work in the mortgage marketplace:
Advisers and brokers
Though banks and building societies dominate the mortgage
lending market, they do not rely solely on their own sales
staff to attract business. Around half of all mortgages
in the UK are still arranged by some form of broker or adviser.
In return for a flat fee or commission on the deal, they
will do the legwork for you and find you a mortgage that
will hopefully meet your requirements. Often you are only
really paying for their knowledge of the products and the
marketplace, though some of them do have access to special
deals negotiated because they refer a large volume of business
to certain lenders. The range of computer software packages
on offer to advisers and brokers means that they can find
and select you an appropriate mortgage almost instantly.
The value comes from the consultation and the assessment
of your needs and their use of this knowledge to find a
product that suits you.
Tied agents
Many agents and advisers have access to mortgages that you
would not be able to arrange on the high street or via a
direct operation. However, some of them are representatives
of a particular financial institution and may only be able
to offer products from that particular provider. Many of
the mortgage advisers that are linked to estate agent offices
are in fact tied agents. They can still call themselves
financial advisers, so long as they don't use the word 'independent'.
They are supposed to inform you of their status during the
first meeting.
Restricting your choice of products to those of one lender
may be fine for many people. Others may view it as too cosy
an arrangement for the agent. They may be duty bound to
offer you the best, most suitable product they have available,
but the chances are that there are better deals out in the
open market. Beware of estate agents who try to insist that
you arrange a mortgage through their adviser.
Independent Financial Advisers
Independent Financial Advisers are usually authorised to
offer advice on the whole range of regulated and unregulated
investment, savings and loan products. They are free of
any ties to financial institutions and in theory, should
look at the entire mortgage market before selecting a product.
They may still have access to special deals not on offer
elsewhere. This is because they may subscribe to a mortgage
panel along with many other advisers and brokers. They panel
uses their cumulative buying power to convince lenders to
come up with special packages in return for their continued
custom. The only trouble is that they have to deliver a
certain level of business over a year to remain on the panel,
so they may slightly favour some products over others. The
panels often contain twenty or so lenders, so this shouldn't
restrict the quality of the deal that you get.
How introducers get paid
There are two main ways in which advisers, brokers and agents
generate revenue:
Some unscrupulous intermediaries will tend towards the
products that pay out the highest level of commission. Be
wary of advisers who blindly insist on the virtues of endowments,
despite your insistence that they are not for you. They
can be great for many people but they are almost always
great for the seller in terms of the amount of commission
they receive. Similarly, you should watch out for advisers
who start pushing other products too heavily - permanent
health insurance, whole of life insurance, income protection,
critical illness etc. Look out for overlap across the products
they are trying to get you to buy, as having to many protection
products can be an inefficient way of covering yourself.
