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Mortgage Brokers Versus Comparison Sites
Services provided by mortgage brokers have taken a bashing recently from internet comparison sites with many claiming that direct deals are easy to arrange and are becoming increasingly popular. However, a quick glance at the figures shows that these statements are driven by headline loan rates and that it is the banks who are using their strength and well resourced PR departments to make headline news in the business pages of magazines and on financial websites.
So what is really going on? One of the biggest internet comparison sites has claimed that the best mortgage rates are only available online via applications from individual customers and directly from the provider. And in fact it is true that those headline rates usually are very good value for money, however there is a big but in this story....... very few people will be acceptable candidates for the headline rate and anyone tempted to apply should take good care to ensure that the product is suitable for them. It is much more likely that after making an enquiry you will be redirected to a different product that has a higher rate and possibly higher arrangement fees.
There is no substitute for good independent financial advice and unless you have a very good understanding of the mortgage market and the implications of the different types of mortgages available, you would be wise to discuss your options with a qualified advisor before applying for a new home loan or to change your lender. It is true to say that in the past many customers were wary of mortgage brokers but the industry has done a great deal to improve its image and make sure that advisors are qualified to help customers understand the mortgage products that are available before making a decision.
David Aylmer, business development and marketing director at TrigoldCrystal has this week issued a statement that includes the following observations - “The role of the advisor has changed from being a gate-keeper to the best mortgage products to the holder of valuable expertise which the vast majority of consumers need to negotiate a market made more complex by the competition of direct-only channels”.
It would seem that the growth in use of internet comparison sites for financial information has grown out of all proportion to their capabilities. Every visitor to these sites should remember a couple of important facts –
- the information is supplied to the sites by slick PR and marketing departments
- headline rates are often misleading and unsuitable for the majority of applicants
- you should always do your own research before making any big financial decisions.
If we consider point one – every bank and building society needs to have a presence on the internet, big banks can afford to promote their services and employ whole teams of media savvy people to make sure that their product appears at the top of the lists in any comparison tables. Their ploy is to use a product that is limited or has restrictions. Make sure you are aware of this and read the small print that accompanies the advertising.
Point two should make you think about your own personal circumstances, if you know that you only have a 5% deposit then accept that you are very unlikely to be able to apply for the lowest interest rate available. If you are looking to raise a very large sum of money then you need to know the minimum and maximum borrowing restrictions that apply to the advertised loan.
Finally point three – remember that comparison sites are businesses that aim to generate profit, they want to attract as many customers as they can just like any other retail or commercial service. Read the information they provide, then go and look at other sources of information to build your own knowledge and understanding of the mortgage products available.
To sum up and backtrack just a little bit, a financial comparison site for any product be it insurance, mortgages , savings or pensions will only ever be able to list information that has been supplied remotely and selectively by the bank, building society or other financial institution They can help to raise awareness of the different products that are available but should not be relied upon when making any kind of big financial decision – always seek out more information and talk to a professional before signing the paperwork.
Contrary to what the big banks and building societies would like us all to believe they do not offer independent advice – they simply wish to sell their own products. Most brokers offer a good service that is individually tailored towards their clients needs and search through the whole market to find the most suitable product.
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