The Hi-Tech investor: Now you can net yourself a better loan
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Your support makes all the difference.The odds of finding a good deal on a mortgage or a loan are much better for households connected to the internet. Yet the choice of products on the market is little short of bewildering, leaving the services of an experienced broker as one of the few ways to find the best rates.
One website launched in the last week promises to make it far easier for anyone who needs to borrow money to compare interest rates and terms. Ultimately, if the site is a success, increased competition should drive down costs even further.
Moneysupermarket.com claims that it has rates for every mortgage, credit card and personal loan on the market in the UK. The site is based on a database of more than 4,000 mortgages and 400 loans and credit cards. Visitors can apply on line to 35 separate mortgage lenders, some 60 per cent of the home loans market.
Moneysupermarket was developed by the Mortgage 2000 Group, which traditionally sold its database to financial advisers and brokers. Making that information available to the public is a step forward, as mortgage brokers can charge a fee - often up to one per cent of the loan - for their services. Moneysupermarket makes no charge to users: instead, the site receives a payment for successful mortgage applications from the lenders.
Users have to register to enter the site, but there are some incentives to sign up. Home owners can use its mortgage health check to compare their current deals with the best on offer in the market. This is an exercise many financial advisers say home owners should carry out at least once a year. The site provides fixed-price conveyancing too.
Consumers who borrow on credit cards can sign up for Moneysupermarket's "rate hound" service. Borrowers put in their current lending details, and the site promises to send an email if another card company offers a better deal. Credit card firms often use low introductory rates to entice people to switch cards, and the "rate hound" should help borrowers keep on top of new interest rates as they are announced.
It's too early to say if all Moneysupermarket's services will operate as they claim, but as most of us have to borrow money at some point, the site should be a success. One word of caution, though: mortgage applicants should double-check the deals Moneysupermarket suggests with the high street before they sign up. This is especially important for remortgages.
Banks and building societies do run special promotions including free valuations and cash help towards legal fees, and not all these offers are on the Moneysupermarket site.
One incentive Moneysupermarket does give is pounds 50 cash back to anyone who successfully applies for a mortgage on line. It's not going to make much of a dent in the whole cost of buying a home, but it helps.
n Moneysupermarket: www.moneysupermarket.com
n Stephen Pritchard can be contacted at: Hi-tech-investor@dial.pipex.com
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