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Money Insider: Beware...don't cut out middle man as you look for a mortgage


The number of new mortgages being taken out may be well short of the volumes seen in the heady days before the banking crisis, but that doesn't mean the job of finding the best mortgage gets any easier.

The number of home loans on offer is mind-boggling and even if you've already worked out whether it's a variable rate or fixed rate product that you're going to plump for you still need to fathom out which is the cheapest option for you.

Unlike personal loans or credit cards the answer isn't as straightforward as referring to a best buy table on a comparison website , although many lenders still market attention-grabbing interest rates, hoping it will be sufficient to win custom from those who don't take the time to shop around or use an independent mortgage broker.

Unfortunately some lenders carry on bypassing the broker community and sell their products directly via branch networks or increasingly online, a situation which has hit the intermediary market hard.

Banks and building societies continue to develop products with profit margins based on a wide range of rate and fee combinations, and for the man in the street it can be a big headache.

One of the biggest problems for consumers is working out which is the most appropriate mortgage based on the total cost, not just the interest rate but also the associated fees which can vary enormously.

Selecting the most appropriate mortgage product isn't a two-minute job because it's not a case of one mortgage fits all. The factors to consider include the length of the term and the amount you're looking to borrow.

It doesn't help matters when you read headlines such as those that surfaced this week saying mortgage fees are at their highest ever. But what about the impact of lower interest rates which have fallen sharply over the last few months?

That sort of ill-judged scaremongering is more down to a craving for column inches rather than a desire to help the consumer.

When you consider your mortgage is likely to be the biggest financial transaction you'll ever undertake, it makes sense to seek advice to ensure you don't make what could be a potentially expensive mistake.

We need to see more lenders supporting the declining intermediary market, as without it increasing numbers of consumers could end up paying over the odds for their home loan.

Savers lose out again in the hunt for an ISA

We're just a few days into the new tax year and already savers are facing an uphill struggle to find an ISA paying a half-decent return.

An increased cash ISA allowance of £5,760 for 2013/14, up £120 on last year, has done little to offset the low interest rates on offer compared with 12 months ago.

The appetite for new funds from banks and building societies is almost non-existent with Funding for Lending providing all the cheap money they require.

Savers have seen best-buy ISAs disappear before their eyes. Last Friday many were looking at 2.55 per cent from Leeds Building Society and 2.50 per cent from Santander as two of the best instant access accounts, and the two-year fixed ISA from Santander at 2.80 per cent was also a stand-out.

By Monday all three had been pulled, a sign that providers simply don't have the desire for customer deposits as in previous years, and for some the ISA offering has been little more than a token marketing gesture.

The Government is constantly reminding us that it wants us all to save more for our retirement, but if it can't create an economic environment to stimulate the short-term savings culture the long-term savings aspirations that George Osborne may have for this country haven't got a hope in hell.

For well over four years now customers have had to put up with a toxic cocktail of paltry savings interest rates and stubborn inflation.

Funding for Lending may be helping mortgage customers and the construction industry, but when will the Government wake up and realise the savings culture in the UK is dying a slow and painful death? Time for a big rethink and maybe a Funding for Saving initiative.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk