Getting a mortgage isn’t as simple as sourcing your car insurance. So why would you look for a mortgage on a price comparison site – in the same place you look for your car insurance?
While admittedly a price comparison site may throw up the best deal, how do you know it’s the best deal and how do you know you’re eligible for it? Mortgages are multifaceted and choosing off a price comparison site means there’s no element of advice involved. Price comparison sites offer what’s called an ‘execution-only’ based service which means they’re not liable for any decisions you make based on the research you’ve done through their page. This is different to the advice you get when using a qualified, professional mortgage broker.
Each bank and building society have highly specific lending criteria which is constantly evolving in line with their appetite for risk. While one bank may be happy to offer you a mortgage, another bank may not. This means getting a decline from one lender isn’t necessarily the end of the road! Lenders choose which niches they’re happy to consider whether that be adverse credit applicants, high loan-to-value mortgages, unconventional property types, complex incomes and many, many other aspects of your application. There is not a price comparison site available that can process the criteria of around 100 mortgage lenders and match you up to the most appropriate and lowest cost product based on your circumstances. If there ever was, our job would cease to exist!
Similarly, each mortgage lender has different affordability calculations meaning the amount you can borrow with one lender may be more or less than with another. This isn’t always a small difference either. Maximum mortgage borrowing with each lender is based on annual household income multiplied by the lender’s income multiple. This can vary from 4.25 to 5.5 depending on the lender, the income and the loan-to-value. ONS data recorded the mean average annual UK household income at £36,900 for 2020. Using an income multiple of 4.25, this would allow maximum borrowing of £156,825 compared to £202,950 using an income multiple of 5.5. This equates to over 30% extra or almost a £50,000 difference in maximum borrowing on the same income – which bank you go to for your mortgage can make a significant difference.
A lot of decisions made by mortgage lenders are down to the discretion of the underwriters. These are people who work for the banks who are responsible for reviewing mortgage applications in line with the specified criteria. A broker should have knowledge of what type of circumstances each lender will and won’t lend to as decisions can be made on the overall strength of an application, even if all parts of criteria are not met. This luxury is not afforded when approaching a bank directly.
Price comparison sites may be a useful reference point if you want to do your own research on what rates are available in the mortgage market. However, proceeding with an application on this basis is ill-advised. A mortgage broker will be able to confirm the best mortgage available for you, based on your circumstances and lenders criteria, even if this simply confirms your own research. It’s worth making sure given your mortgage is such a major commitment.