Tesco mortgage deals under fire from IFAs
IFA Craig Taggart has called Tesco Bank’s new mortgage proposition “frightening” because no advice was offered and it did not use brokers.
Mr Taggart, head of mortgages for London-based Baigrie Davies, said the rates were “relatively competitive” but consumers will not have recourse to advice.
He said: “It’s good to a see a new lender but not one that doesn’t go through brokers. If consumers want advice on a Tesco mortgage they will have to pay for it, rather than the cost going through the provider. It’s quite frightening.”
Robert Sinclair, director of the Association of Mortgage Intermediaries, said he welcomed new entrants to the mortgage market. However he said the problem with Tesco’s mortgage offering was that the product range was complex and did not support a non-advised service.
He said: “The mortgages have a high and low-fee model in that one product will have fees, while virtually the same product will have no fees but higher rates.
“Therefore you have to understand the effects of those fees given the amount of money you’re borrowing and the term you’re borrowing for. That normally doesn’t support a non-advised market. What Tesco Bank is offering should be for an advised market.”
ING, which came into the mortgage market four years ago, launched with a non-advised model but started to go through brokers 18 months ago.
Mr Sinclair said: “ING came on to the broker side to get the type of customers it wanted. We might eventually see the same thing with Tesco Bank.”
A spokesman for Tesco Bank said it had no plans to go through brokers and would not be giving mortgage advice. He said customers apply either online, or by phone or both.