House Doctor: 'Is it a waste of my time to go straight to a bank for a mortgage?'

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The Independent Online

Question: Am I wasting my time if I go straight to a bank for a mortgage? I don't want to use a broker after getting nowhere last time in late 2008 as they didn't have the deals I wanted.

Ben Youngers, Wiltshire

Answer: Getting your hands on a mortgage ain't what it used to be. Whether to use a broker or not used to be a simple matter of choice but the vastly altered financial climate has made it a difficult decision.

This all changed when the recession bit, with lenders no longer willing (or able) to offer competitive deals to all and sundry.

"With less money to lend, banks and building societies began a policy of what was known as 'dual pricing' – offering one rate for the public who applied direct and another, much higher one, if bought via a broker instead," says Gavin Brazg of property advice website www.theadvisory.co.uk.

The aim was to curb demand via brokers – and it worked – but the upshot was that borrowers began to view brokers less favourably since they were unable to offer the same number of deals as before.

Last year, research by price comparison site Moneysupermarket.com found that nine out of 10 of the cheapest home loans were only available direct from lenders.

However, the wheel has turned again as lenders are once more keen to start grabbing market share as well as offer "broker-exclusive" loans.

Research from Legal & General Mortgage Club suggests that nearly two thirds of borrowers will now find it tricky to get a home loan direct from a bank unless they can stump up a 25 per cent deposit.

It all means that you have to try both a broker and go direct to banks to unearth the cheapest deal; "and if you're unsure about using an individual broker, there's nothing to stop you trying two or three different brokers to see which is best", says David Hollingworth at London & Country.

In plenty of cases, he adds, "a broker will easily match the best deals on offer from lenders direct".

Earlier this month, for instance, borrowers going direct to HSBC with a deposit of up to 40 per cent, could find a very competitive lifetime tracker at 1.89 per cent above Bank of England base rate, for no fee.

At the same time brokers were offering an ING lifetime mortgage at 1.85 per cent above base rate for a £945 fee but with a free valuation and legal work for remortgagers.

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