Finding the right mortgage deal

For many, it can be one of the most stressful parts of the process and for first-time buyers especially, it may be overwhelming sifting through the mortgage products that are available and understanding the jargon.

A study of 2,000 homeowners by mortgage broker Trussle shows many people find the traditional mortgage application process to be “opaque and time-consuming”, with 23 per cent of borrowers reporting they found the experience to be stressful.

It can also be inconvenient, with the study reporting 23 per cent of homeowners were forced to take time off work to make arrangements for their first mortgage.

Deal or no deal?

Finding the right mortgage deal is especially important in regions such as the East Midlands, which was found to be one of the hardest regions in the UK to get accepted for a mortgage, according to research by the University of Nottingham.

Choice Finance Mortgages and Financial Solutions says the research reveals for those living in the East Midlands, the chances of getting accepted for a mortgage are four times less likely than other parts of the country.

The best way to get free, independent advice on all the products on the market is to use a broker, but don’t assume any old broker will do.Alistair McKee

Matthew Pennell, managing director at Choice Finance, says: “It’s easy to get downcast when you hear that your area is one of the toughest to get accepted for a mortgage, but dealing with the things you do have control over is a really positive step, and will show lenders that you’re serious. 

“There’s no need for anyone to rule out buying in the East Midlands, they just need to be savvy, do their research and get advice from experts.”

This, of course, applies wherever the borrower is looking to buy.

Expert advice seems to be the answer to not only securing the right mortgage deal but also making the process much easier and less stressful for buyers.

One of the biggest issues is knowing what products are available and how to choose between them.

Jeremy Duncombe, director at Legal & General Mortgage Club, admits: “With thousands of new products coming to market and a whole set of new lenders to contend with, navigating the mortgage market can be a daunting task for borrowers.”

He suggests that by speaking to a broker, borrowers can tap into a wealth of knowledge and advice about the mortgage market and gain access to a much wider range of solutions than going directly to their bank.

He adds: “Advisers also have the capacity to make clients aware of other important products they should be considering such as protection.”

Mortgage brokers now boast a successful approval rate in nine out of 10 cases, according to the Intermediary Mortgage Lenders Association.

Alistair McKee, managing director of mortgage broker One77 Mortgages believes: “Several misconceptions about the mortgage market abound in Britain and they end up costing consumers millions of pounds each year. 

“The best way to get free, independent advice on all the products on the market is to use a broker, but don’t assume any old broker will do.”

Shopping around

What is the best way of finding a broker?

Mr McKee points out the need to “shop around”, just as you would for a mortgage.

“You must be careful to ask each broker whether they compare the whole UK market because most only work from a panel of perhaps eight to 10 lenders so clients don’t really get the full picture,” he warns.

“Then there’s the issue of fees. Find a broker who doesn’t charge you a fee.

“All brokers receive a fee from the lender and most then also charge the customer as well. This double charging is so widespread that people assume it’s unavoidable but we don’t think it’s justified and there are many more like us.”

UK Finance estimates that overall gross mortgage lending in August was £24.2bn, of which £15.1bn was lent by high street banks.

There is no ‘one size fits all’ solution, and brokers can help find products that meet an individual’s circumstances.David Torpey

But Mr McKee advises: “It’s never a good idea just going to your bank. Many people think that because they are already a customer, they will be treated more favourably because loyalty pays. That’s certainly not the case. 
 
“You’ll be underwritten in the same way as someone who does not bank there.”

He points out: “The other downside to going to your bank is that you only get their products. 

“The bank next door might do a better deal, lend you more and on better terms, but you will never know.”

Keeping your options open

Homebuyers often report being turned away by conventional high street lenders, so knowing there is a wider range of products out there from different lenders is useful.

Importantly, there are plenty of ways to get mortgage advice and find out about the options, whether it is via a mortgage broker, or a financial adviser.

As David Torpey, managing director and chief operating officer at Bluestone Mortgages, observes: “The UK has thousands of independent mortgage brokers who can provide support to help consumers find the right mortgage product for their needs.”

He confirms: “There is no ‘one size fits all’ solution, and brokers can help find products that meet an individual’s circumstances, allowing them to secure the best deal for them.

“For those who feel they are being turned away by high street lenders, specialist lenders who operate through intermediary channels are also a very viable and secure alternative to finding a mortgage.”

He suggests: “In many cases, speaking to an adviser and the cost associated with this is either nothing, or very low compared to the potential long-term saving to be gained.”

eleanor.duncan@ft.com