Mortgage advice - Jonathan Cornell

Where to find the best mortgage advice

Mortgages aren’t the easiest things in the world so most people tend to seek advice to sort them out. However even then there are a huge number of choices with regards to where you get advice and what the limits are.

If you go directly to a bank or a building society then in most cases you will be sold a mortgage from their own product range. It is highly unlikely that you would be choose a mortgage that isn’t from the banks own range. Banks tend to sell mortgages in two different ways. One is in a way whereby you receive advice (an advised sale) and the other way is known as “non advised”. It is absolutely vital that you understand the difference. When you receive advice you will be asked a series of questions to give your advisor a detailed view of your circumstances, based on your answers they will give you advice and make a recommendation as to the most suitable mortgage for your needs. The adviser will have undergone a lengthy training process before they are able to give you advice, in most cases they will have passed the Certificate of Mortgage Advice and Practice qualification or be in the process of studying for it. If you don’t receive advice and take out your mortgage through a non advised sale, the person who you speak to will simply let you choose whichever mortgage you want, they will present you with a list of rates and you pick the one which you want. They won’t assess whether or not this mortgage really suits your needs, they complete the paperwork to arrange it. You are solely responsible for the mortgage you choose and you can’t go back and complain that it wasn’t suitable for you. In medical terms it’s a bit like going to a doctors surgery and telling the receptionist what’s wrong with you and asking for a prescription of the medicine you need. If you receive advice from your bank as they won’t have access to the whole range of mortgages on the market it’s a bit like going to a doctor who can only prescribe medicines from one particular pharmaceutical company.

When you visit a mortgage broker or a financial adviser, you will nearly always be given advice unless you choose otherwise. However there may be a limit to the scope of the advice you receive. Most people would assume that if you adviser is “independent” then your adviser will be able to sell all of the mortgages on the market but confusingly this is not the case. The term “independent” means that your adviser offers you the choice of paying a fee and you receiving any commission paid by the mortgage lender as a refund. to find out how wide a range of lenders your adviser deals with you need to ask if they “work from a panel” or if they are “whole of market”. If they work from a panel then its like going to a doctor who prescribes medicine from a range of pharmaceutical companies. It might be a huge range or it might be a very limited range. That said if your adviser doesn’t deal with every single lender in the market its not necessarily very bad news. At the moment there are very few lenders active in the mortgage market so 5 or 6 lenders are arranging 80-90% of the mortgages. But it is worth asking if there are any major lenders which your adviser doesn’t deal with.

You should ask similar questions regarding any insurance products that you are looking to take out. Even if your bank has the cheapest mortgage, it is very unlikely that it will also offer the cheapest life assurance or buildings and contents. Most mortgage brokers or financial advisers don’t charge an upfront fee, so if you want a second opinion on any mortgage or protection policy they will be able to see if there is anything better available in the market.

Jonathan Cornell

Jonathan has been involved in the financial services industry for more than 15 years. He is current working a number of freelance projects, including working part time for First Action Finance as Head of Communications. He has a BA in Economics and an MBA. Jonathan lives in Guildford, Surrey is married and has a one year old son.