Types of mortgage advice
So what are the different
types of mortgage advice and where would you expect to find them?
Non-advice
This type of mortgage broker
offers the least consumer protection, they will simply ask a set of questions
to narrow the customers requirements and thus filtering the number of mortgages
available. They then present the customer with a small list of possible
mortgages for the consumer to choose one appropriate. The consumer protection
here is based on the script of questions the broker asks. The script is a
process determined prior to the consumer appointment, and is impersonal.
Therefore specific personal circumstances are unlikely to be assessed. It also
assumes that the customers answers are factually correct and the final choice
is made solely by the consumer. Although no advice is offered these brokers do
handle the arranging of the mortgage on the consumers behalf, and therefore
dealing with all the chasing and removing stress from the process.
Where would you expect
non-advised brokers to exist?
Well believe it or not many
non-advised brokers are within the high street banks and building societies.
Advice-only
This type of services is
where a mortgage adviser uses their knowledge and skills to provide the most
suitable mortgage to suit a consumers personal circumstances. This will involve
a full fact finding interview, affordability assessment, discussion on the
consumers future plans and aspirations, all of which provide key facts on a
consumers requirements, and therefore a means for the adviser to identify
suitable products. The adviser will not however, handle the arranging of the
mortgage, and therefore the consumer would need to deal directly with the bank
or buildings society to arrange the mortgage.
Where would you expect
advice-only advisers to exist?
These advisers generally do
not exist alone this is often a service provided through the 'Independent
Mortgage Adviser' type below. And often comes about when the most suitable
mortgage is only offered direct through high street (i.e. not through mortgage
advisers/brokers). The adviser would therefore offer an advice-only option to
the client and often charge a fee for this service. Although the client must
deal directly with the bank or building society their mortgage adviser often
provides support to the consumer.
Tied mortgage advisers
Tied mortgage advisers come
in two forms 'only offering mortgages from one lender or its own mortgages' or
multi-tied 'only offer mortgages from a limited number of lenders'. This
clearly limits the number of mortgage products available to match a consumers
personal circumstances and in a lot of cases they may not be able to offer the
most suitable mortgage product and therefore advice may result in the best
mortgage they can offer, being woefully inadequate.
Read more on... The
Benefits of Using an Independent Mortgage Adviser
Author: Steve Wentworth
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