No doubt competition in the mortgage market has great benefits for consumers in terms of innovation and price, but it does make finding the right one a difficult task.
Yes there are more number crunching search tools than ever before, however unlike finding the highest interest rate on an Instant Access Savings Account it serves no purpose finding the cheapest mortgage interest rate if for some reason the proposition is not acceptable to the chosen lender.
So to give an example Mr X finds the cheapest tracker rate on the planet which is offered by the Deep Pocket Building Society. Mr X completes their form and is accepted. He pays £650 for the property valuation and the survey is completed. Two days later Mr X receives a letter stating that the property does not represent suitable security as it comes with 2 acres of land and the lender that Mr X applied to has a maximum of 1 acre.
The above is just a very simple example of what can go wrong and represents just one of tens of issues associated with the property acceptance criteria alone.
Construction type, warranty situation, building configuring, lease type, location………the list is endless.
We have not even got as far as talking about the minefield that applicants have to negotiate in terms of lenders personal underwriting. How things have changed since lenders became responsible for assessing and testing affordability.
However those lending in the mortgage market have all decided to interpret the rules in different ways under the FCA’s “Responsible Lending” regime. The rules state for example that income from sources other than employment can be considered; some will consider this income and other won’t.
Some lenders will accept background properties; others will not and if they do may apply a stress test on rental to mortgage interest cover or have a limit on how many the applicant can own or how long they need to be owned for.
The potential pitfalls stated here in this article don’t even scratch the surface of complex lending criteria, however the innovative way that lenders find to compete other than purely on interest rate is actually good for consumers when used to their advantage. After all, we are all different!
Finding a mortgage loan that “fits” all criteria is the main advantage of using a professional mortgage broker. Many lenders have moved “clever” niche’s products away from branches as they are difficult to understand and give them out for broker only distribution. In additional most tend to have support staff that do the admin and telephone work for you. Many work on a telephony basis, and use modern technology to avoid the prospect of wasting hours sitting in a lenders branch being “interviewed”.
It seems that the “value” of a good Independent Mortgage Broker is a lot more than finding the cheapest interest rate.