Banks may offer more competitive deals than brokers

A recent report has shown that banks in the UK may be offering more competitive mortgage loan deals directly rather than through brokers, which means that consumers that go through a broker could find that they end up paying more than they would if they went directly through a lender in some cases.

Direct providers and banks are said to be offering highly competitive mortgage loan deals to try and stay a step ahead of rival providers, and this means that going through a broker could end up being more expensive. However, brokers have stated that if consumers choose to bypass them they could end up missing out on a range of specialist deals.

Some mortgage lenders such as the internet banking giant First Direct, which is part of the HSBC group, have decided to bypass brokers altogether for their deals. Officials from First Direct have said that there is no need for the company to go through brokers when they are able to offer such competitive deals direct to the consumer.

However, brokers claim that there are a number of reasons why consumers should go through a broker rather than direct to a bank, such as the diminishing number of people that now qualify for banks’ deals, and the fact that whilst a particular bank may be offering the best rate at one point this can quickly change.

One broker said: “First Direct and HSBC may have the best deals today but this can change and, besides, the number of applicants who will actually qualify for the banks’ criteria of three times income, a squeaky-clean credit record and large deposit, is fast diminishing. The reality is that most cases are not this easy and will require the expertise and contacts of a mortgage broker.”

Tags: bank, broker, point, consumer, Mortgage broker, finance, fast diminishing, Business Finance

People need to review life insurance requirements

Many people “are running around uninsured” as a result of neglecting to change their insurance policies to reflect changes in their circumstances, says an industry expert.

Life Direct said it is “extremely important” for people to review their life insurance policy whenever their circumstances change.

Keiran Platt, director and financial adviser at the broker, said that people should not be put off by looking at life cover options, as it need not be that expensive.

He said: “The cost of life cover has been reducing a lot over the last few years – so it may be that they can cover their new circumstances and not be paying much more.”

Mr Platt added that a lot of people cover their mortgage but do not think about protecting their family as well.

According to estimates from the Association of British Insurers, one in three Britons maybe underinsured as a result of not renewing their life insurance cover in five years.

Tags: broker, Insurance, financial adviser, Association of British Insurers, director, expert, looking at life, life cover options

Mortgage shock on horizon for many

Borrowers with a fixed-rate mortgage managed to avoid the recent interest rate rises but some are set to see their payments increase.

The reason, says mortgage broker London and Country (L&C), is that those who took out a mortgage two or three years ago may be about to see their fixed-rate deals come to an end.

L&C points out that the best two-year fixed-rate mortgage available in May 2005 was available from Newcastle Building Society, with a rate of 4.49 per cent and a fee of £420.

On a £150,000 interest-only loan, a borrower would have been making monthly payments of £561.25 per month. However, once the fixed-rate deal ends, borrowers will be paying 7.34 per cent interest, taking monthly payments up to £917.50.

“The payment shock for many borrowers will be substantial when their deals to come an end and it’s important that they do all they can to minimise it,” said James Cotton, mortgage specialist at L&C.

“The advice is simple: see what new deal your lender is willing to offer and shop around elsewhere.

“Most importantly, plan ahead and don’t leave it until you’re already paying Standard Variable Rate,” he added.

Borrowers are advised to try to get the best deal when taking out a mortgage for the first time but must be prepared to pay higher rates of interest once the deal comes to an end.

Tags: interest, May, GBP, Mortgage shock, broker, payment, Mortgage broker, building

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Tags: bit, Insurance, larger excesses, car insurance, broker