22.07.08 by Andrew Montlake

Martin Lewis & The Mortgage Maze

Last night I settled on our nice new sofa, already stained with a little bit of baby sick, in front of the telly to watch a Tonight programme on mortgages with the usual sense of trepidation I guess most people in the industry feel when these programmes go out. Would it be another sensationalist slagging of the industry and all who work in it ?

Once I saw that Martin Lewis was the presenter however, I relaxed, as I have personally always found Mr Lewis to be a fair-minded chap, exploring all sides of an argument and genuinely seeming to come down on the side of the consumer - well, he is a consumer champion after all.

For once I saw a programme that presented the facts as they actually were, and someone who presented good, sensible advice in this market - although I'm not sure of Mr Lewis's actual mortgage qualifications ! Just kidding, he did a great job.

Basically, the advice given to all those looking to remortgage was to do 3 things. Firstly, as any decent broker would also suggest, find out early, (at least 3 months in advance of your rate expiring), what your existing lender is offering. Secondly, do a little of your own research providing you have the time to do so. Check on web comparison sites to see what you think is available to you.

Thirdly, and most importantly in my book, armed with this information speak to a "whole of market" independent mortgage broker to get proper advice.

Now none of this is rocket science, but surprisingly many people still believe they have to go to their existing bank or that a broker will be too expensive. What the programme showed is that with a little work and a little professional advice, things may not be quite so bad as they seem when it comes to remortgaging for the average applicant.

Of course you need to remember that brokers do not have access to every product at the present time, hence the homework bit on the internet, however, as Ray Boulger eloquently countered, there are many lenders who only offer products through brokers, and broker exclusives are coming back.

Also, with lenders repricing products down in recent days, products like the much-publicised HSBC Rate Matcher product are not as competitive as they once were. For example, to borrow £100,000 on a rate of 4.79% would mean a fee of £3,099 - which is 3% of the loan amount - as a rough guide this would be the equivalent crudely of a rate at 6.29% once the fee is taken into account over a 2 year period.

In other words you need to look at both direct providers and broker offerings to make an informed choice. Given the changes in many lenders fee structures, Best Buy tables may be misleading and you could find that you are comparing apples with oranges.

Again, a good broker will help you compare so you get the best product, and professional advice could save you thousands of pounds over the term of the mortgage, whether or not you end up actually transacting through the broker. Again, a decent broker will be honest with you as to whether to stay with your existing lender, look elsewhere or transact through them.

Anyway, thank you Mr Lewis for a balanced programme that showed the issues and the realities of the mortgage market at the moment and offered some sensible advice.