Should you engage the help from a mortgage broker or can you do it yourself?
On occasion clients ask us the ‘elephant in the room’ question. Why do we need you to help us source finance, when surely we can do it ourselves by just committing a bit of time!?
The worrying fact is lenders seem to have a difference of opinion on many aspects of criteria, from income, commission, address history and debt. The problem is then compounded when call centre staff from individual lenders also seem ill informed or worse deliver the wrong information. Try multiplying this by a 100 and you start to get a sense of the problem and why Carbon exists.
If you were to ask existing clients who have just seen and experienced a full funding advice piece to do it on their own next time the response would be…er… no thanks.
It is now a widely accepted fact that buyers need advice
No matter how well paid, well educated, how many hours of research you have done, how many online Best Buy tables studied, the simple act of chatting through your options with an impartial independent mortgage broker looking out for your best interest cannot be replicated.
Let’s be clear, we are not imparting some mystical secrets that are carefully hidden away from the general public, although the small-print in many lenders criteria can sometimes seem as such. Put simply, a good adviser enables the client to make their own decision based on a deep understanding of what is realistically possible and satisfying their true requirements.
However, there still seems to be a general misunderstanding as to what a mortgage broker actually does or how they add value.
Anyone can tell you in seconds what the cheapest rate in the market is but is it the cheapest deal? At any given time this will vary between a direct to lender product or a broker only deal, but this misses the point. Can this product actually be attained and is it the best fit to your personal circumstances? If it can and does then how long will the lender take and will this work for your time line?
Simply identifying the answers to questions such as the ones listed below will begin to give you a clearer outline of the diverse impact personal circumstances have on lender choice:
- Do you have an element of bonus or commission? Is it paid weekly, monthly quarterly or annually as lenders differ depending on your answer.
- Are you refinancing, when does your existing product expire, do you need a 3 month or 6 month mortgage offer as lenders differ here as well.
- Do you have any debts, childcare or pension payments, are you paying them off or keeping them. Once again huge spread of variance from lenders and how they interpret commitments and how it affects your loan capacity.
It must be said that with the increased availability of finance and mortgage information online this has helped to educate the public. Many of our clients will have therefore done the necessary research ahead of meeting us, and so perhaps a stronger idea of what they are looking for. This does not mean they are comfortable dealing with the banks directly and, if anything, this assists us in the mortgage process as we have a clearer picture from the outset as to what our clients’ requirements are.
Even with technology gains, the notion that online research is able to truly to give a client enough information to make an informed choice is sadly just not true.
A website will not be able to talk the lenders credit team through the complex income structure of self-employed business owners. Every client has a subtle but very different set of circumstances or requirements that often they themselves do not realise they have, and with online research there are no bespoke solutions provided to suit your exact lending requirements. Further still, comparison sites often fail to tell you about every product that may be available to you, for example products that are exclusive to brokers, direct through certain lenders or available through private banks. Many have also been found to, and somewhat frustratingly, put their sponsors’ products at the top rather than the ones that are most suitable or known by brokers as being available as a criteria exception.
Often what occurs is that the whole range of highly competitive and often market leading products are recommended to high net worth individuals by Private Banks offering a completely bespoke lending solution. However a number of institutions are not interested in the mass market, leading to certain demographics remaining unaware of a number of products that exist and that they are not eligible for unless they consult professional advice.
Service is also key. Securing the property of your dreams often means moving quickly and, rather than having to take painstaking steps that are invariably involved when walking into a branch, many brokers have designated points of contact to expedite processing and decision making. Forecasting is vital in this process; knowing what to look out for and acknowledging any potential pitfall in advance will aid in the smooth running of the application
20% of our monthly calls are often from clients that have tried to do the process themselves or direct through their own bank and sadly hit problems.
At Carbon our consultants examine products and criteria all day every day. They have proven formula to process cases quickly and maintain long standing bank relationships to discuss any irregularities before your time is wasted. We hope you don’t encounter any problems but the reality is there are issues that can arise in any property purchase process. In this one area alone the broker relationship can be an invaluable resource.
Is there a charge and why?
Brokers do tend to charge for their time, expertise and administration. It is a professional, qualified, heavily regulated industry and our time does need to be accounted for.
Our fees will always be discussed with you in the early stages, you will never encounter a Carbon fee you are not prepared for and not authorised in advance by signing a fee agreement form.
Our initial pre-application research is free of charge and there is no obligation to proceed.
It’s worth reiterating the context also, the nominal fees we charge are invariably the lowest amount in the entire house buying process. When you consider the impact and the money that can be wasted/saved over the mortgage term our advice could be considered excellent value for money.