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Doing this has become more difficult, particularly with the fluctuating number of products available as well as regular changes to product criteria which can mean that a customers circumstances which did fit yesterday, do not fit today.
In essence, we have a more complex market – add to this the fact that many product providers and lenders offer different deals direct to consumers than through the adviser channel, and we can see why many consumers have difficulty navigating themselves through the maze.
Left to their own devices, without professional advice, consumers can find choosing between the options available particularly tricky. For example, on mortgages alone, there are currently over 90 lenders offering hundreds of different schemes, some by going direct, some exclusively through advisers and some only available via the internet. Where would you start? How can you be sure you’re making the right choice?
Case Study:
Let's assume you want to purchase a property for £208,583 and you want a repayment mortgage of £177,296 over a 25 year term.
For the purpose of this exercise we will assume you want a fixed rate for 2 years.
Let's also assume that you meet all the lenders' criteria and that the following options are available.
Lender A offers a fixed rate of 5.29% fixed until Feb 2011 with a £799 arrangement fee.
Lender B offers a fixed rate of 5.69% fixed until March 2011 with a £995 arrangement fee.
Which one would you pick? On the face of it, Lender A’s deal looks the cheaper option. Doesn't it?
However, there are many more questions to be asked before choosing the deal.
For instance:
What other fees would I have to pay?
What are the early repayment charges?
What compulsory insurance do I have to buy?
What is the ‘true cost’ over 2 years?
How much do I have to pay up front?
In the above example taking all costs into consideration, it is in fact lender B that offers the best value, but the point is that unless those additional questions are asked, the consumer could end up a more expensive deal.
This is where a professional mortgage adviser would be of great benefit. Consumers should always seek impartial financial and mortgage advice – only in this way can they be confident that all bases are covered, that they are protected and that they will come away with a deal that fits their own personal circumstances…
Which would you do? Wander down the high street? Go it alone via the internet? Or consult someone who has PROMISED to put your needs first?
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