1/5/09Importance of advice

According to one source, there were recently just 4,357 mortgage products available, compared with almost 41,000 a year earlier. So who needs professional advice now?

The answer to this comes in the next statistic from Trigold, the system used by many professionals. Apparently mortgage professionals searched for more than 483,500 mortgages last December, a third more than a year previously (source: Incisive Media 14/01/09).

The fact is that with a shrunken mortgage market, it is more difficult to find the right deal, rather than easier. This may seem rather counter-intuitive, since one generally considers that greater choice leads to confusion, so more limited options should make things easier.

All too easy to make a mistake

In theory, making the wrong mortgage decision will mean that you pay more for your borrowing than you need to - and therefore lose money. This is, of course, true but it is not the only thing that can go wrong; and a ‘do-it-yourself’ approach to arranging your mortgage could have serious consequences. This is because if, in the course of looking for a loan to buy a new home - or simply rearranging your existing borrowing at the end of a special deal period - you apply to too many lenders, you will find your credit rating blighted for some time.

Yet this is precisely what borrowers may try to do, if confused by competing advertised deals. It is here that the services of a professional mortgage broker are so important.

Knowing who to ask

The skills involved in arranging mortgages are not simply a matter of knowing how to present your circumstances in the best possible light, so that lenders are more willing to offer you the loan you want on favourable terms.

This is important; but it is also a core part of a professional mortgage adviser’s skills to know which lenders are best for what sort of requirements, at any one time. Of course, this will change on a regular basis, as lenders seek to attract a balance of borrowers in order to give them a spread of ‘risk’. So what was true last month may not be the case now. If, without the appropriate market knowledge, you apply to several lenders at the same time, the second one will see that a search has just been done by another lender and wonder why. If there is any doubt in their mind - perhaps they imagine that you are desperate for a new loan, or are trying to get two mortgages on the same property - they will be more likely to reject your application. At the very least, your credit score will suffer.

By consulting a professional mortgage adviser, he will know which lender is most likely to be willing to lend to you and will only approach one company. Should that application fail, he or she will have sufficient knowledge and market contacts to re-present your case - possibly to an alternate lender - in the best possible light.

Key points
• The mortgage market is smaller than a year ago
• This makes it more difficult to find the right deal
• DIY can lead to costly mistakes; advice is essential