When is paying less actually paying more?

Dream First Home

The title may sound impossible, but as we often find, it can be all too true.

When searching for a mortgage deal there are many variables to consider. During the course of what us brokers call ‘fact-finding’ we ask questions to narrow down the thousands of possibilities. The more information we gather, the more accurate the results and the more likely our customers are to be accepted first time with their chosen lender.

To coin a phrase; it’s like painting pictures with words.

Here’s an analogy for you. If you visit a site to search for mortgage deals and you are asked to enter, for example; How much you want to borrow, over how many years – you click ‘search’ and a list of results is displayed. This is the equivalent to drawing your first ‘stick-man’ picture as a child. You don’t know from the results if you are eligible for any of the deals now before you. They’re usually just a list of deals starting with the lowest rate at the top.

The thing is, if you had to go through the process of ‘fact-finding’ or, sticking with our analogy, painting the Mona Lisa, with every lender out there to find out if you were eligible for any of their deals, then it becomes a daunting task indeed. Especially if afterwards they don’t like poor ol Mona.

So the problem is two-fold; that ‘stick-man’ drawing (low rate) looks really good! And can you be bothered to paint the Mona Lisa a dozen times?

I like to tell people that if you speak to one bank, you speak to one bank, if you speak to us, you speak to them all. Or in painting terms, the equivalent to being able to paint a picture once and run off as many copies as you like.

The bank you just spent an hour or more inputting information to won’t let you copy that information over to one of their competitors, oh no. And even if they did, every lenders’ application is different, sometimes slightly, sometimes unrecognisably.

This is just one reason you should use a broker instead of trying to go direct. But be careful, that ‘stick-man’ (low rate) can still seem mighty tempting.

Going back to the question posed in the title of this post, we sometimes find that after we complete the ‘fact-finding’ process and present our illustration(s)/quote(s) to our customer, that they then go away to draw another ‘stick-man’ and come back to us saying “But the monthly payment with the deal I’ve found is cheaper” or “The rate I’ve found is lower” – now assuming they are eligible for the deal they’ve just found, have they really found a better deal?

A (good) broker will compare the deals thoroughly for you. You may find that the monthly saving is immediately out-weighed by the huge arrangement fee added to the loan, but that may not become apparent until you receive your next mortgage statement and wonder why the balance has increased rather than decreased!

Or another feature, such as a free valuation or free legal work or the ability to make overpayments isn’t available with the other deal they just found.

This is why we paint the Mona Lisa with all our clients. And because we’ve painted her so often, we’re really fast at doing it, in fact it’ll just seem like you’ve had a friendly chat with one of us and what you’ll get back are deals that contain all the features that are important to you.

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