 |
 |
|
|
|
||
 Mortgages FOR SALE from Complete guide to Homebuying December 2002 Call an estate agent for details of a property and you're likely to be offered mortgage advice too. But should you take it? Graham Norwood finds out In the blur of activity surrounding house buying, it may be tempting to use a one-stop shop like an estate agent offering mortgages and other services as well as selling homes. Being able to do so much of the house buying process in one office is worth a lot in itself but can you also get a better deal this way? The middle men The mortgage specialists based in estate agents' premises can act as “intermediaries”. This means they are agents of a specific mortgage company - as in the case of the Halifax estate agency, which offers only mortgage products from the HBOS group of lenders including the Halifax Bank and Birmingham Midshires. Or sometimes estate agents act as allies of a mortgage broker with access to a wide range of mortgage products - as with Knight Frank estate agency, which has a link with Charcol mortgage brokers. Most estate agencies with a mortgage adviser do offer the full range of mortgage products (fixed rate, variable, flexible, buy-to-let, capped and so on) but tend to shun the more exotic or unusual. Sometimes they do have their own “branded” products but because they come originally from an established lender, they will be identical to a product available elsewhere on the market. This is why you may be offered a mortgage that you can't find listed in this magazine or on any mortgage website. So if there is no better deal on offer, can a house hunter at least have a better chance of getting the home they want by buying a mortgage through the same estate agent as they buy a property? The answer is a resounding no – for legal reasons. In the late 1990s a small number of estate agents were criticised for allegedly giving priority to clients buying both a home and a mortgage through the company. Clients interested only in buying a house, for example, believed they were being given lists of hard-to-sell properties because they were not committing to a mortgage, too. But that practice was effectively stamped out after warnings from the Office of Fair Trading, the ombudsmen for the financial services and estate agency professions, and trade bodies like the National Association of Estate Agents. These bodies say people should get the same, impartial treatment whether they buy a home or a mortgage or both through an estate agent. Giving priority to a customer buying both puts anyone buying just one at a disadvantage. “This isn’t a big issue now” says Stephen Carr-Smith, the Ombudsman for Estate Agents. “Last year I received fewer than 20 complaints from people who believed they had suffered because an agent tried to link the sale of property with the sale of a mortgage product,” he says. “But increasing numbers of estate agents are acting as agents for financial products, too, so buyers need to become more aware of their rights and what to expect”. Saving shoe leather So is there ANY advantage in applying for a mortgage through an estate agent? “Absolutely," says a spokesman for Your Move estate agency. "We’re a one-stop shop that understands the property market in each specific locality and understands the mortgage market. We can give customers the best deal in their area.” Visit just one office and you avoid the hassle of clicking through scores of mortgage websites, or tramping the streets to visit several banks and building societies. But you must remain sharp-witted to get the best deals. Remember, few estate agents have as large a choice of potential mortgage products as a wholly independent broker with access to the entire market. Most stick with a panel of lenders. “A borrower should deal with an adviser who operates with as many lenders as possible and not just a small panel,” says Ray Boulger, Charcol's senior technical manager, mortgages. “A lot of estate agents have panels with only around a dozen lenders. The agents will genuinely hunt around for the best deal within those 12, but it’s unlikely to be the best deal available on the market. Remember that there are actually about 150 lenders in the market place as a whole,” he says. As a large broker, Charcol has the freedom to strike deals with any of the 150 but in practice uses 80 of them frequently - the rest have uncompetitively high interest rates or target specialist buyers of overseas homes, properties with subsidence or buildings where the legal ownership is disputed. At the top end of the property market, mortgages are sometimes unnecessary, but where borrowing is required it can involve seven-figure sums. Top-end estate agent FPDSavills has its own lending subsidiary called Savills Private Finance (SPF), which specialises in obtaining large sums for what it calls “high-net-worth individuals”. SPF’s average loan is £350,000 and the largest single loan it sourced in 2001 was a whopping £11 million. “Even £350,000 is high compared to most mortgages, which are around £80,000. So there is an advantage to going to a specialist dealer who knows this end of the market," says SPF’s Mike Bowles. "We know immediately which lenders will even consider such a big loan. Anything above £2.5m is completely bespoke - there just aren’t many banks that can afford or are willing to lend that amount.” Clients pay dearly for the process - SPF charges up to 1 per cent of the loan amount for arranging the mortgage, which could add up to £10,000 on a £1 million loan. See-through selling However much you want to borrow when choosing an adviser there is one thing you should consider above all. “There should be transparency,” says Brad Baker of the Mortgage Code Compliance Board (MCCB), a body that monitors a “best practice” code for lenders and their agents. “As with any other intermediary between a lender and a borrower, an estate agent should make clear whether he’s looking at every possible lender, whether he’s getting a fee as a result, and how he reached the decision,” he says. Baker says only 2.9 per cent of the 2,000 or so mortgage advisers who subscribe to the voluntary code are estate agents (far fewer than the actual number of agents which offer mortgage products). But there has been no greater number of complaints involving these members than any other sector of the mortgage industry. “So far they are performing in line with other lenders or advisers,” according to Baker. "Try them, as you would try any mortgage seller”.
|
DECEMBER MORTGAGE FEATURES 
|