They market themselves as a hassle-free way to find a house loan, where you do not pay anything to use their services and computers do much of the legwork. So is it time to provide an electronic mortgage broker a spin?
Trussle and Habito are two well known online broker firms, and generally claim they have the ability to search through thousands of mortgage deals to advocate the most suitable one for you. Some of these, such as Habito, involve you having a conversation with a chatbot.
A report out recently gave this new breed of mortgage broker the thumbs-up, and a fast evaluation by Guardian Money discovered these mortgage broker websites are well worth a try, even if it’s simply to get an idea of just how much you would have the ability to borrow and the most competitive deals for people in your position.
Until a couple of years back, if you were considering taking out a mortgage but did not know which one to go for, youmight attempt to fathom the very best price out of a set of generic outcomes on a price comparison site, or you might visit a conventional mortgage or commercial real estate agent — one that either provided fee-free advice or that billed you — to do the searching for your benefit.
However, the new breed of online brokers claim their cutting-edge technology makes locating and applying for a mortgage a faster and slicker encounter — and as a client you pay nothing for the support and they are trusted, high quality advisors. Exactly like a traditional agent, the sites get a fee from the lender when the borrower completes their mortgage.
Launched In December 2015, Trussle was the first online broker to start in the United Kingdom. Other online brokers, such as Habito, Dwell (which recently changed its name to Burrow) and MortgageGym soon followed.
Andrew Hagger of site moneycomms.co.uk has authored a study on the websites for mortgage brokers, commissioned by one of the newest players, Burrow, which has recently launched a television advertising featuring a kangaroo. He states that while they all have the exact same intention — to save customers time, money and hassle by quickly pointing them at the direction of the most appropriate mortgage product — they operate in different ways.
The main competitors search the market of 90–plus creditors looking for the best deal, though with Trussle there are no help-to-buy deals available yet, and MortgageGym only supplies a service for remortgage customers (it intends to include first-time buyers and home movers from the end of the year). Habito, doesn’t offer products from big industry lenders such as HSBC, but does have access to over 70 lenders.
All four of those players are pretty good in their own way,” states Hagger. He adds that they provide an adequate option for customers, in particular those who wish to get pointed in the right direction in a matter of minutes by top business advisors instead of having a protracted face-to-face meeting.
However, Ray Boulger at conventional broker firm John Charcol, says of the electronic upstarts: “They admit the advice is given by humans. No one has yet developed an artificial intelligence system that can do that [the advice process] properly.”
He adds that while there are some administrative facets of getting a mortgage which could be improved upon, in regards to the actual advice procedure, “people value talking to a human” and the skill of a flesh-and-blood broker is in “being able to ask the right questions”.
We gave the four sites a fast go. We utilised a made-up case study: a couple who are both 49, with two teenaged kids, living in a £500,000 three-bedroom house in east London, that are looking to remortgage and have an existing home loan of 200,000. They’ve recently come to the end of the deal and wish to fix their monthly obligations. He earns £40,000 and she earns £20,000. Their monthly payment is now £1,000, which is probably unrealistically low, but we wanted to throw down the gauntlet.
This site asked our couple plenty of questions, including how much each paid into a pension, which not everybody would know off-hand. The site was user friendly and at the end of the procedure — that took around 10 minutes – our couple were awarded a mortgage rating of 1,000 from 1,000. This sounds a bit unlikely. The site then said that if the couple went for a 2 year fixed-rate mortgage with an initial interest rate of 1.29%, they would pay£910.95 per month — a monthly saving of £89.05. But this deal has fees of £1,114. Otherwise, the couple could change to a Halifax three-year fix priced at 1.44%, where the monthly payments are £924.76 and the charges £999.
One useful feature of the website is that it lets you know how much you can borrow from particular creditors, which provides you an insight into which ones are most likely to be looser with the purse strings. In accordance with Burrow, Halifax would give the couple £285,000, while Santander would lend £243,786.
This site was also user-friendly. We keyed in a variety of pieces of information, including how much the pair earned and the condition of their finances, and it told us they could take out a two-year fixed-rate mortgage with Barclays priced at 1.49%, paying £924 per month. The charges were estimated at only £35. Habito also told us that the maximum borrowing amount for our commercial real estate purchase was £330,000. If you would like more than this quick summary, it is then over to the business’s (human) mortgage specialists for an online live chat.
The website says you can “complete your profile to receive a personalised mortgage recommendation”. This involves answering a couple of non-intrusive questions — it just took us a moment. Trussle then told us we could proceed to some two-year fixed-rate deal at 1.39%, where our monthly payment could be £916 — a saving of 84. However, it didn’t state which lender was offering this. To get additional information around the mortgage we’d have had to answer far more questions. We began the process but bailed out when it asked for a real address and other details for our made-up couple.
MortgageGym has partnered with credit reference agency Experian on a 60-second mortgage matcher service, which claims to find around four bargains you’re most likely to be approved for. But some people might be put off by the fact that it needs a whole lot of personal information: name, date of birth, address, income, etc. The service then does a “soft search” of your credit history. This sort of credit check isn’t observable to creditors and can only be observed by you, it states. There are then plenty of human experts available on the internet to aid with the application.