Banks, Building Societies & Brokers
1. Your bank will give you the best mortgage deal on the market, right? After all, you have banked with them for many years so they will give a better deal for your loyalty.
2. Even if they don’t quite have the best deal, the bank manager knows all about your finances so will ensure that the mortgage is offered quickly?
3. Should they not have the very best deal, and may take a few weeks longer than expected to get your mortgage approved, why would you pay a broker to arrange your mortgage for you?
These are probably the three biggest objections I hear as to why customers do not want to seek advice from a mortgage broker, so let’s look at these points in turn.
1. At any one time, there are likely to be over 3,000 different deals from over 80 lenders. Therefore, the odds of you speaking to the bank or building society that have the best deal for you, on the very day you contact them, is actually quite small. Even if you do happen to be speaking to the ‘right’ lender on the ‘right’ day, as a general rule there are changes in the interest rates for many lenders every working day.
By the time you go back to that bank or building society to make your application, whilst their rates may not have changed, another provider may now have a better option. A mortgage broker would point out to you the change of rates, but would your bank tell you than another provider can do a better deal than they can? What about loyalty – brokers won’t have access to special rates, will they? Actually, they do. We know that some lenders give better fees for having certain types of bank accounts with them, or give slightly lower rates or a cash back for being an existing mortgage client. Not only do brokers know about this, they have access to these rates too and will advise you accordingly.
2. With regards to the processing of a mortgage application, your bank or building society are not allowed to give you a preferential level of underwriting based on your existing relationship with them. No matter how well you feel your bank manager knows the conduct of your accounts, the underwriter on the mortgage processing side of the business will assess your application based on the facts in front of them against their policies and criteria.
Some mortgage lenders receive hundreds, if not thousands, of applications each and every day and take each one in turn. The processing of these applications, other than in the very smallest of building societies, is done at a separate administrative unit that is not within the branch network. Therefore, the influence that a bank manager can have is minimal. Mortgage brokers have a choice of which lender to use, so it is important that the lender provides excellent service to brokers. Should a lender’s service levels drop, a broker will advise their client accordingly as they would not want to risk losing the property they are purchasing.
In some respects, the service of the provider can be just as significant as the interest rate. Most banks and building societies have business development managers that brokers have access to in order to step in should service become an issue. These business development managers usually have direct access to the underwriters, which means that applications made through brokers will often be approved quicker than those made directly with the bank.
3. Our own bank will only offer a product from their product range and will never tell you another lender will offer you a better interest rate, they will also not tell you, another lender is offering a product with a free basic valuation, no fees and cashback.
Although they are happy to charge you £200 – £300 for a valuation, add up to £1,000 – £1,500 fee to your borrowing and give you no cashback. In addition, the bank will only offer their own criteria. Different banks offer different lending criteria and different borrowing amounts, which could make a massive difference in the house you want and the house you buy because your bank tells you this is all you can borrow.
In contrast, a MORTGAGE BROKER could save you the valuation fee, get a product with no fees and obtain a cashback of between £500 – £1,000, not only this but could get you a lower interest rate. However I am not going to use a mortgage broker because they might charge me a fee, is what you may say to yourself
The SAVING, using a mortgage broker could add up to £2,000 of fees even after paying the broker a fee.
In summary, in order to have the best chance of finding the most suitable rate for you, with a provider that will process your application in a timely manner, you should seek professional advice from a qualified mortgage broker. The Mortgage Company is our sister company and will help you with all your mortgage and protection needs, for a no obligation chat please call 0115 9518898 to arrange an appointment
