A home-buying guide published by the government has been criticised by brokers for playing down the importance of mortgage brokers when buying a home.
The MHCLG “How to buy” booklet is available online and is aimed at consumers in England and Wales. Others in the series include “How to sell a home”, “How to rent” and “How to let”.
The guide states: “A mortgage lender will consider the total amount you can borrow and how affordable your monthly mortgage payments will be when deciding how much to lend.”
It also says: “Using a mortgage broker can be a good way to get individualised mortgage advice, although you may have to pay a fee. It may be especially useful to get individualised advice if you have unusual circumstances (e.g. if you are self-employed or have a low credit score), as this can limit the types of mortgages that are available to you. Equally, many lenders will have mortgage advisers who can advise on their own range of products.”
City Finance Brokers director James Chisnall says: “The Government’s How to Buy booklet is very generic and doesn’t highlight the benefits of using an independent mortgage broker. The statement, ‘although you may have to pay a fee’ cheapens the value of good, professional, independent advice and points people towards the lenders’ in house mortgage advisers. However, it doesn’t highlight enough that these advisers do not represent the whole of the market and just that bank’s products and policy. An independent adviser represents the client, whereas a bank represents the bank.
“It also advises that you should use a broker if you have unusual circumstances, such as self-employment or poor credit. This applies to clients of all circumstances, not just people in those categories. For example, lenders have hugely different affordability calculators and lending policies, and a client approaching their high street lender will not be advised that a competitor across the street would be more generous in loan amounts or flexible in policy. The only way to understand these nuances is via a professional.”
Rowley Turton Private Wealth Management director Scott Gallacher says: “The guide is somewhat of missed opportunity to promote the value of professional advice. There are something like 4,500 mortgage deals available at any one time; consequently the chance of someone finding the best deal for them without professional advice is slim.”
Coreco director Andrew Montlake says: “I think, to be fair, it is tricky for the Government to put their feet on one side of the fence rather than the other. However, saying that it would be fairer to have a paragraph on the benefits of using a mortgage broker and how they can look at the whole market rather than just one provider. The phrase, ‘although you may have to pay a fee’ could be construed negatively without further explanation of the overall service and full advice process you are paying for.”