Your Money: Save us from the mortgage saviours
Home-buyers are being bombarded with purchasing deals, writes Robert Liebman
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Your support makes all the difference.A hundred competing mortgage offers might as well be a million for the average consumer. A hundred options is approximately 95 more than most punters can or want to deal with. In fact there are thousands of different mortgages available. Various types of adviser promise to come to the rescue - but some customers clearly need saving from their would- be saviours.
"Homework is for pupils, not property hunters." That was the view of Anna, a personal assistant in London, whose property outings usually ended in frustration and fatigue. Properties were either hopelessly dilapidated, overpriced and needing work, or lovely affordable places already under offer. Waiting for her at home were stacks of mortgage brochures which she had picked up from local building societies and banks, and sincerely intended to read. Alternatively, she could drink a glass of wine. Always, the brochures came in second.
Mortgage literature is not exactly easy reading. How does a three-year 7.9 per cent repayment mortgage with mandatory insurance but no arrangement fee compare with a two-year 8.2 per cent mortgage without mandatory insurance but with an arrangement fee, taking into consideration early-redemption penalties, competing endowment mortgages, caps and collars, and cashbacks? "I did try to make sense of it all, but I always gave up," Anna says.
Like many bewildered buyers, she sought solace and some answers by consulting her local building society's mortgage adviser. "I was confused, and this meeting seemed the easy way out," she says.
In the event, the adviser cited a three-year 7.9 per cent repayment mortgage with mandatory insurance but no arrangement fee compared with a two-year 8.2 per cent mortgage without mandatory insurance but with an arrangement fee, taking into consideration early-redemption penalties, competing endowment mortgages, caps and collars, and cashbacks.
Anna thought it all sounded very familiar. The adviser had summarised the brochures in a manic outpouring. Anna emerged without enlightenment but with a headache.
An independent financial adviser (IFA) recommended by her boss was Anna's next port of call. Familiar with her building society, he promised her the cheapest possible mortgage at no fee to herself.
"In fact, his deal was horrendously expensive, at least double the amount in the brochure. He claimed that insurance was mandatory, but I checked the brochure and my building society, and he was wrong," Anna says. She was increasingly sceptical. "He arranged contents' insurance without asking how much I might want to be insured for. And he seemed to favour one particular insurance company."
She now believes that when his self-interest clashed with her interests, he favoured his own.
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