Choice has become something people seem to value above plenty of other things nowadays. From national health hospitals to ordering a cup of coffee or the issue of when to ‘settle down’ there is no end to the choices and decisions we have to make.
And deciding which mortgage to take out should also bring plenty to think about. Not only is the choice of mortgages available from hundreds of different lenders huge, but there are also many different types of mortgage adviser.
So wouldnÂ’t it simplify the whole process just to do a bit of research yourself?
James Cotton, mortgage specialist at mortgage advice firm London and Country, disagrees.“ The leg work is done for you by an adviser who will do all the research and find you a mortgage. It is also not just about finding the mortgage but the whole process from researching it to the completion point that involves an awful lot of work. The adviser will also be able to recommend a product and help you through the application. He will then process it and deal with the lender and solicitor to get the offer through.”
Headline rates
For those seeking out their own product, many fall into the trap of looking at the rate offered above everything else.
The problem here is that many borrowers will not be eligible for these mortgages. As Cotton says: “Often when you are looking at the internet and doing the research you will be looking purely at the rate. But all lenders have different criteria, there are different policies and quirks and if you have a situation which is slightly out of the ordinary, for example being self-employed, or looking to borrow a fairly high amount, the extra knowledge that an adviser has should save you time as they will know which lenders and products are the most suitable for you.”
Finding the right advice
But how does one go about finding the appropriate adviser? There is no substitute for personal recommendation, so itÂ’s best to ask friends, family members and colleagues. Even if they had bad experiences at least you know who to avoid.
Duncan Pownall, mortgage development manager at Bradford & Bingley, says: “Word of mouth is very good and friends who have gone through the process recently should be asked.”
Otherwise, the internet is always a good starting point. From IFA PromotionÂ’s mortgage arm (www.impartial.co.uk) to AdviserFinder (www.adviserfinder.co.uk) or MyLocalAdviser.co.uk, speak to two or three advisers to see which one you prefer.
One of the factors you need to consider is whether they offer the choice of mortgages you need and how fees are arranged. Some advisers charge a fee while others will earn commission on the mortgages they sell.
A third category will offer clients a choice between the commission or a fee. This way clients can be sure that the broker is not only suggesting the mortgage that pays the highest commission.
Read the small print
To help clients understand the service they are being offered, advisers must give clients an initial disclosure document (DD).
This should be studied closely and includes the range of mortgages the adviser can offer, how the adviser is paid, procedures to complain if there is a problem and any refund policies in place, should the mortgage not go ahead.
Once a mortgage is selected, the adviser next has to give the client a key facts illustration or KFI. This will set out the details of the mortgage selected and the payment that the adviser will receive, so do study it carefully. If anything is unclear on any of this documentation, you must always ask.
There is no doubt that advisers can make the task of finding a mortgage easier. Not only can they help find the right product, but they will take care of all the paperwork and tie up any loose ends, from chasing up the mortgage lender to flagging up missing paperwork.
But customers should never be afraid to ask when confused or walk away when if they are unhappy with the service they are receiving. Mortgage advice is a service they pay for whether through a fee or commission and borrowers should make sure the adviser is earning it.
How to find the best mortgage adviser
• Word-of-mouth recommendations are the most important form of endorsement because they are derived from someone’s direct experiences
• The internet is a tremendous source of information on everything from how to find an adviser to mortgage products
• Look for a local mortgage adviser
at www.impartial.co.uk or www.adviserfinder.co.uk
• Reputation – do the brokers have a good local reputation?
• When you make initial contact with the broker, does he or she spend time explaining the options and products available, or do they seem hurried or distracted?
• Do the brokers deliver on their promises, especially over staying
in touch?
• Are the brokers flexible about how to contact you? For example, will they use e-mail, telephone or contact you in person? Are they available at the weekend?
• Do they charge a fee? Often, this can be positive, as it means that
the broker is independent but since mortgage regulation, all advisers are duty-bound to offer best advice In association with Mortgage Talk
Types of financial adviser
INDEPENDENT FINANCIAL ADVISERS (IFAs) should offer unbiased financial advice to their clients from the whole of the market and be qualified to recommend the most suitable products to you.
The key difference between an IFA and a tied broker is that IFAs act for you and give you the option of paying a flat fee or percentage fee for their advice.
TIED AGENTS can tell you about a single product range, for example, an adviser in a high street bank is a tied agent. The bank or financial firm they work for pays their salary and may pay commission as well.
MULTI-TIED AGENTS are financial advisers who sell and advise on products from a selection of providers, rather than just one. There are a variety of ways to pay these advisers. You can either pay a flat or percentage fee, or the adviser may receive commission.
