What do you get from a mortgage broker?

More and more people are turning to intermediaries to help them find the right home loan. But both fees and standards of service can vary hugely

A RECENT survey by Barclays Bank revealed that most people are baffled by the jargon that surrounds mortgages, together with the maze of interest rates (variable and fixed), discounts, cash-backs and penalties - particularly those that carry on beyond the life of any special offer.

Long gone are the days when you could walk down any high street in the country and find that virtually all building societies and banks offered the same rates of interest on the same terms. Now the choice is overwhelming.

The same survey showed that eight out of 10 first-time buyers were confused by the range of mortgages. Only half the 1,667 borrowers questioned knew what a repayment mortgage was, while six out of 10 understood the difference between endowment and repayment mortgages.

No less than 72 per cent confessed to not really knowing what was going on when taking out a mortgage. Barclays' mortgage supremo, Gary Skelton, said the survey's figures were "worrying and that the whole industry needs to sit up and take notice".

Borrowers are also worried about the risk of being locked into loans by stiff redemption penalties if they take up the many special offers available, and about the possibility of losing their jobs, falling ill or finding themselves in negative equity.

The situation should be tailor- made for mortgage brokers, who should be able to cut through the verbiage and help clients to get the best deal available.

One of the few building societies to work only through intermediaries is the Surrey-based Mortgage Trust, which was recently acquired by the First National Building Society of Dublin, Ireland's largest and oldest building society.

Chris Heard, Mortgage Trust's managing director, emphasises the importance of having "independent advisers who have the experience and dedication to work tirelessly on a person-to-person basis to successfully negotiate a mortgage which meets all the requirements of the borrower. Buying a house can still be one of the most traumatic transactions we ever undertake, and arranging the mortgage is a major aspect."

He explains that Mortgage Trust sets about finding its professional mortgage advisers by "checking they are authorised by the personal finance services watchdogs or, where accountants and solicitors are used, by their relevant registered professional institu- tions. We also conduct our own investigations into the backgrounds of our potential business advisers.

"What we require are professional mortgage advisers whose integrity and ability have been thoroughly checked out and tested, and will therefore be able to give borrowers the specialist help and guidance that they so sorely need now."

Barry Edwards of Reeves Financial of Horsham, West Sussex, says that mortgage brokers will charge a fee for arranging a repayment mortgage where no commission is payable. That reflects a rapidly growing trend now that commissions have to be disclosed. "The fee is negotiable," he says, "and will depend on the amount of work involved. But a straightforward search for the best repayment mortgage available, relevant to the borrower's financial criteria, and making all the arrangements could cost as little as pounds 250.

He adds: "It could eventually save a lot of heartache and perhaps even the roof over the borrower's head."

Investment-type mortgages, such as those linked to endowment policies or PEPs, pay a commission charge. But even here, Mr Edwards reports a growing tendency to negotiate.

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