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The BBC a month or so ago had an article today entitled “The Dark Art of Obtaining a Mortgage“.
The article was written by a mortgage broker.
He claimed it is very difficult to obtain a mortgage even if you can satisfy the criteria. If you’re scared, you see, there is always that friendly local mortgage broker who is there to hold your hand.
The mortgage broker who wrote the article doesn’t mention how much commission the broker makes on the mortgages he sells. Nor does he explain how it is that those mortgage brokers are so amazingly well-informed about the fast-changing mortgage market. Perhaps they use price comparison websites. Or maybe they just read the glossy leaflets they get sent by the mortgage providers.
Here’s that broker’s dark tale of fear to have a typical first time buyer trembling:
There are many tales of woe from seemingly decent borrowers who have either been turned down or, more commonly, been told that they can only borrow a lot less than they need…
There has to be more innovation in the 80% to 90% loan-to-value market.
Lenders who currently operate in this area, seem to make it very difficult for many borrowers to actually obtain the offer they request…
The first hurdle to overcome is the dark art of the lender’s credit score.
This can be tightened and loosened at will as a lender decides exactly when to increase or decrease their lending levels…
Decent independent mortgage brokers will know which lenders are moving quicker than others and what they are likely to ask for at any given time.
There are many good borrowers who are being turned away every day for reasons they cannot quite fathom.
Well, the clue to the reason for all this may be the paragraph near the top of the article:
Lenders suggest they are providing almost all their applicants with the mortgages they apply for directly.
Could it possibly be that one of those “reasons they cannot quite fathom” may well be that many applicants use mortgage brokers who don’t give a toss about them except as a source of a commission, and typically have less knowledge of the mortgage market than you could get from a comparison website?
Sensible advice for obtaining a mortgage is pretty similar to the advice for buying anything:
1. Don’t use a mortgage broker. They are middle-men who add no real value to the process for you, the borrower, and often mess things up.
2. Use a price comparison website to have a look at the kind of deals that are available. Or you could simply stick with your own bank, who will know your history and therefore probably need less documentation from you. And the saving from going elsewhere might not be that great.
3. Stick to reputable companies, preferably ones you have dealt with in the past.
4. Read the lender’s documentation carefully and provide the documentation they ask for. If you need help with this, don’t go to a mortgage broker. Instead ask the lender, who will be extremely happy to help you apply for one of their products.
5. And don’t, whatever you do, go to a mortgage broker. Whatever the BBC may tell you.