The credit crunch has taken its toll on the number of mortgage products (in particular for buy-to-let) and naturally on the number of mortgage brokers. We have found out first hand the advantages of approaching a bank directly … read on.
In 2007/2008 there were 1000+ mortgage products, buy-to-let landlords and home buyers could obtain mortgages with ease using a self-certification income. Today the number of mortgage products has dropped significantly, and some banks are now offering products direct, not via a mortgage broker. The upshot is that many mortgage brokers will not be able to get you the best deal, you now need to do some more research yourself.
Whilst we believe mortgage brokers are a key resource for property buyers you should not rely on them exclusively, here is our case study:
- Buy-to-let property mortgaged with the same bank for 10 years. An equity release was required to build up a fund to buy other properties.
- A reputable mortgage broker was appointed to find a product. The offer was a tracker at BBR + 3% for 2 years, then revert to the lender’s SVR. There were admin fees and a 3% arrangement fee to pay. After 4 weeks the mortgage failed to complete due to a small technicality about the property freehold – banks often look for excuses not to lend.
- Next approach was to the existing mortgage lender (should have done this first). They offered the same SVR interest rate for a remortgage equity release, and best of all only £255 in admin and legal fees. Note that this bank was no longer offering products through mortgage brokers, the advantage we had was the existing bank relationship and a known low-risk profile.
Clearly this example does not apply to everyone, however it does support the view that approaching an existing bank with whom you have a proven history of mortgage borrowing could save you time and a lot of money in fees!
