Types of mortgage advice
So what are the different types of mortgage advice and where do you expect to find it?
This type of mortgage broker offers the least protection for consumers, they will simply ask them a set of questions to narrow down the needs of the clients and thereby filter the number of mortgages available. They then present the client with a small list of possible mortgages for the consumer to choose an appropriate one. The consumer protection here is based on the script of the questions asked by the broker. The script is a process determined before the consumer’s meeting and is impersonal. Therefore, specific personal circumstances are unlikely to be assessed. It also assumes that customer responses are factually correct and that the final choice is made solely by the consumer. While no advice is offered, these brokers take care of arranging the mortgage on behalf of the consumer and therefore take care of all lawsuits and taking the stress out of the process.
Where would you expect unadvised brokers to exist?
Well, believe it or not, there are a lot of unadvised brokers that are part of the big banks and building societies.
This type of service is where a mortgage advisor uses his knowledge and skills to provide the mortgage best suited to the personal circumstances of consumers. This will involve a full informational interview, an affordability assessment, a discussion of future consumer plans and aspirations, all of which provide key facts about consumer needs, and therefore a way for the advisor to identify the appropriate products. However, the advisor will not take care of arranging the mortgage and therefore the consumer will have to deal directly with the bank or real estate company to arrange the mortgage.
Where would you expect specialist advisers to exist?
These advisors usually do not exist on their own, often a service provided through the “independent mortgage advisor” type below. And this often happens when the most suitable mortgage is only offered directly on Main Street (i.e. not through mortgage advisers / brokers). The advisor would therefore offer an advisory option only to the client and would often charge a fee for this service. Although the client must deal directly with the bank or building society, their mortgage advisor often provides support to the consumer.
Related mortgage advisors
Tied mortgage advisors come in two forms: “offering only mortgages from one lender or their own mortgages” or “offering only mortgages from a limited number of lenders”. This clearly limits the number of mortgage products available to match the personal circumstances of consumers and in many cases they may not be able to offer the most suitable mortgage product and, therefore, advice may result in the best mortgage they can offer, which is sadly inadequate.
Where would you expect mortgage related advisors?
Branches of the high street. A consumer calls their local branch of the construction company and their in-house mortgage advisor can only offer mortgage products from that construction company. Consumer choice and the suitability of mortgage products are drastically reduced. Additionally, high street branches often offer low mortgage rates / fees as a claims leader (marketing term for doing business) and then try to sell their related insurance products which are often also woefully inadequate and expensive.
All the advice on the market By far the best coverage that these mortgage advisors can offer from any UK mortgage lender (with mortgage advisor / broker routes). The large amount of mortgages available through these advisers is likely to cover the individual circumstances of a consumer. Mortgage advisors from across the market offer advice by conducting a full informational interview, affordability assessment, discussion of consumers’ future plans and aspirations, and then can arrange the mortgage through from the lender, reducing the stress of buying a home.
Where do you expect all of the market advisers?
These advisers are usually separate businesses that are often found in the yellow pages or on the Internet, sometimes they are linked to real estate agents. At an initial meeting, mortgage advisors are required to state whether they represent the entire market and this will be disclosed in the “Initial Disclosure Document” they provide to you. If you’re not sure whether an advisor represents the whole market, ask them.
Independent mortgage advisor for the entire market
Finally, this type of advisor has the ultimate reach of the mortgage market, not only can they offer mortgage advice from the wider market (lenders with mortgage advisor routes) but can also offer an advisory only process. they identify a direct high street transaction. more appropriate. The statement “Independent” indicates that the advisor must offer the consumer a paid service if necessary. This means that rather than the advisor taking a commission as payment for the mortgage advice, the consumer can opt to pay the brokerage fee and any commission is refunded to the consumer. The advantage of the paid service is that the consumer knows that the advisor will not be swayed by higher commission mortgage products when selecting a suitable mortgage loan, but these days this is highly unlikely because the advisor mortgage must prove to the regulator why a particular mortgage is the most suitable. In some occasions where the commission is quite large, this would mean that the consumer could receive more money than the brokerage fees paid and therefore it would be better to adopt the fee-based approach.
Where would you expect to find independent advisors across the market?
Like the author of this paper, independent mortgage advisors are typically separate firms that can often be found on the main street, in the yellow pages, or on the internet and are sometimes linked to real estate agents. At an initial meeting, an independent mortgage adviser would state that they represent the entire market and offer a fee-based approach if necessary, which will be disclosed in the “initial disclosure document” that they provide you. If you are unsure whether an advisor is independent and / or the whole market, ask them.
What are the independent market mortgage advisors doing for consumers?
The advantages of going for an independent set of market mortgage advisors include, but are not limited to: –
- Treat customers fairly.
- Take time to gain key factual details of the consumers personal circumstances and aspirations.
- Support and inform the consumer from initial enquiry right through to completion and beyond.
- Provide an informed view on the housing market in general (price negotiation, leasehold issues etc).
- Provide a individually tailored service specific to the customers needs, not a faceless “one size suits all” (non-advised) service.
- Advise consumers to thing about their long-term interests as well as the short-medium term thus minimising risks.
- Work for the consumer – estate agents, lenders and insurance providers have a different agenda.
- Explain the features and benefits of different mortgage and protection options.
- Free to act based on conscience and fairness as not usually directly targeted on specific areas.
- Protect consumers data and privacy.
- Provide general support during what is acknowledged to be one of the most stressful events in life.
- Provide a knowledgeable “Ally” in what can be a very worrying process.
- Provide proficient, impartial, examination of mortgage products.
- Identify when specific lending criteria restricts consumers personal circumstances.
- Expert guidance in complex scenarios (shared ownership/shared equity, right-to-buy, adverse credit).
- Identify the potential lender in unusual situations, thus avoiding the need for multiple credit checks.
- Select the best protection providers for consumers with health issues or unusual insurance histories.
- Choose the most appropriate products, from the whole of market for each aspect of a consumers mortgage and protection needs, and thus increasing their ability to afford their commitments, even when things go wrong.
- Highlight unusual exclusions on protection and general insurance products.
- Ensure the provision of appropriate and customized protection products.
- Quickly find an alternative lender if declined without wasting the consumers time.
- Can arrange property insurance in ample time to be ready for exchange of contracts on purchases.
- Encourage competition and innovation from lenders.
- Assist in calculating affordability, ensuring that consumers can afford their mortgage and protection commitments, along with their other commitments.
- Perform data input/entry for the consumer, reducing errors, omissions and most importantly non-disclosure.
- Take responsibility for the advice and recommendation provided, thus increasing consumer protection.
- Protect the consumer from corporate sales tactics used by some lenders and estate agency chains.
- Understanding the urgency of some transactions and “go the extra mile” to meet deadlines.
- Collate, verify and supply documentation for the lender, thus reducing delays in processing and expedite the process for the consumer.
- Liaise with third parties in the transaction, tracking progress and any developments updating consumers throughout.
- Use past knowledge and awareness to predict problems and resolve them in advance.
- Act as an advocate for the consumer during the application process.
- Explain the mortgage offer and assist in fulfilling the offer conditions.
- Can find appropriate lenders and insurers for unusual properties ( thatched roof, flying freehold flats etc).
- Protect consumers from aggressive third-party marketing.
- Often personally available outside of normal working hours to answer questions or resolve issues.
- Care about consumers and provide an ongoing long-term service, often several generations of the same family.
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