The New World of the Mortgage Application Process

Gone are the days when if you wanted a financial product as daunting – and expensive – as a mortgage you would pop into your local bank branch for a cosy chat with the manager.

As recently as 2012, the vast majority of mortgages were taken out directly from a bank or building society. Today, the combination of fewer bank and building society branches, a growing loss of faith in many banks’ ability to give sound advice and more complex rules around taking out a mortgage has resulted in a significantly higher number of people seeking brokers to provide expert advice. Some industry experts are predicting this will be the preferred route for as many as three-quarters of borrowers in the next five years.

So should you join them and head to a broker for your home loan – or are intermediaries a waste of time?

Part of the recent rise in brokered mortgages is due to new rules introduced with regard to regulated lending (National Consumer Credit Protection Act 2009) that make it a more complex task to get a home loan. Following the introduction of NCCP, lenders are now required to ask much more detailed questions of borrowers, meaning that a typical interview to secure a home loan now takes two to three hours. It is not only the application process which has become longer but also the time to get an appointment with a local bank representative that has also become drawn out. With the new legislation requiring all mortgage sales be dealt with specifically by qualified lending staff, the wait to get an appointment and receive an assessment has also dramatically increased.

The new process has also decreased the value of using online websites to source the best loan offering as often the best rate or deal offered is meaningless if you don’t qualify for the loan. “Making the wrong choice about your mortgage can cost you hundreds – even thousands more than you need to pay,” says consumer rights campaigner James Daley of website Fairer Finance. “And because mortgages are awash with additional fees and charges, it’s all too easy to get tripped up. That’s why it makes a lot of sense to go with a mortgage broker.”

Given brokers are paid directly by the bank and in most cases enable the customer the ability to access the full range of products which they may not otherwise have access to, more often than not a broker can not only save customers significant time but also significant money.