Independent Advice Essential

[MasterMortgagebroker]

News StoryBroker 'essential' in current climate
Wednesday 7th November 2007

Current market conditions make a mortgage broker essential to anyone looking to get a new mortgage, according to mortgage brokers Alexander Hall.

Figures from the Council of Mortgage Lenders (CML) state that 14,000 properties were taken into possession in the first half of 2007.

Andy Pratt, chief operating officer of Alexander Hall, feels that brokers have the skills to make sure borrowers get the right deal.

"Everybody should take independent financial advice, particularly around mortgages. At this point in time, when there's a lot of uncertainty, I think it's absolutely imperative - more so than ever - that a client should seek somebody with an impartial view.

"Brokers can provide mortgage advice across an independent range of products. That's important because, at the moment, products are changing quite a lot," he added.

Mr Pratt said that while information sites are often very good, they were better used to get a general idea of what is out there, before going to a see a broker.

Simon King

[Will]

I can't think of any good reasons why anyone looking for a mortgage wouldn't seek independent financial advice!

[MasterMortgagebroker]

Hi Will,

Well you'd be suprised the number of customer that are loyal to their bank account provider and tend to have all their financial products all with that same provider. Lenders rely on this and as such interest rates via an independent advisor can be far more attractive. Lender's can often charge customers higher rates by going directly to them because they will rely on loyal customer's not seeking independent advice. Naughty i know but it happens

[Will]

I can certainly appreciate the power of fear of the unknown and also of inertia. We took out our first mortgage with Nationwide in 2003 and signed up for payment protection insurance (PPI) at the same time. Only recently have I switched to a third party provider at less than half the cost, but with more benefits.

By the way, slightly off topic, but what's your view on PPI?

[MasterMortgagebroker]

I certainly agree with the principles of PPI and what it's there for, however i think there should be much caution given to the criteria that varies from provider to provider.

What you covered for or rather what you are not covered for in some policies is ludicrous and to even call it cover at all at times is laughable. i suppose it really underlines the requirement of having an independent advisor to clearly explain the benefits of all products with a completely unbiased view.

[MasterMortgagebroker]

Hi Will,

Well you'd be suprised the number of customer that are loyal to their bank account provider and tend to have all their financial products all with that same provider. Lenders rely on this and as such interest rates via an independent advisor can be far more attractive. Lender's can often charge customers higher rates by going directly to them because they will rely on loyal customer's not seeking independent advice. Naughty i know but it happens

Just to follow up this comment. This was an article taken from a national finance research bulletin. Interesting reading i think you'll agree.

Thursday 8th November 2007

A total of 40 per cent of homeowners stick with one mortgage lender while a quarter have not changed lenders when their initial deal expires.

A poll by mform.co.uk found that 14 per cent of mortgage customers do not look for a new deal and 13 per cent take the new deal they are offered.

With an average standard variable rate (SVR) at 7.75 per cent it is thought that yearly savings of £2,130 could be made by shopping around for the best deal.

Chief executive of mform, Eamonn Rice, said: "Loyalty should be rewarded but the millions of mortgage customers who have never moved lender are potentially paying a massive price for not searching the market."

While 40 per cent have not changed their lender, 25 per cent have switched once, 15 per cent twice and 16 per cent at least three times.

Mr Rice felt that borrowers were becoming too loyal to their lenders and thought people may not want to change because of high fees.

"Many may be deterred by the fear they will have to pay high fees to move but the reality is that they can make significant savings," he said.