When the best rate is not the cheapest rate

Posted on 23 October 2015 by Alistair Hargreaves

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When the best rate is not the cheapest rate

When is the best rate not the best rate? Sounds rather odd, as surely my role as a broker is to find the best rate for a client? Well, actually it’s not. I see my job as finding the most appropriate lender and the most appropriate product for my client, on an individual basis. Sometimes this co-incides, and the cheapest rate available is actually the product I recommend, but this is not always the case.

So how can that be? Well it often depends on the client’s needs. If I am told that we need a mortgage offer within two weeks I will be looking at lenders who can move fast; chances are they will not be the most competitive, however there is little point in having a great deal if the offer comes out three weeks too late and the client loses the house.

I might be speaking to a client who has a very particular set of circumstances – one year’s company accounts, credit issues, unusual property, issues with a visa, to name but some of the situations that can make obtaining a mortgage tricky. In those cases I would be looking at a more bespoke lender, and again, it’s highly unlikely that that client will have the cheapest rate in the market.

The key, I think, is finding the best value product for my client from the options available to them, as well as working towards a longer term plan. So, for example, I might be dealing with a client who has bad credit and they wish to move house. I would approach a specialist lender who will be able to take a view on the situation, and hopefully help out – however the rate would probably be higher than the best in market as the lender has priced for risk. Well this mortgage is a means to an end – it will allow the client to buy the house and hopefully resolve their credit issues, and then in two years’ time I re-visit the case. At that point I’ll work with the client to explore their longer term needs, which hopefully means going to a lower rate.

And that, I believe is the key. Properly tailored mortgage advice, on a bespoke basis, should take into consideration everything for that client and their situation; and if that means that the best product for them is 1% more expensive than the best in market, then so be it.

There is nothing more frustrating for a client than a broker trying to ram a square peg in a round hole by chasing the best rate in the market, and then trying to make the circumstances fit. More often than not this leads to a decline, and time and money wasted, or even worse a client losing a property.

Every client I provide advice to has the best rate, for their set of individual circumstances – be it the best rate in the whole market, or the best out of three specialist lenders offering to help; or sometimes just the one rate from one lender if the case is that complex.

Best means different things to different clients, but I always make sure they receive my best advice.

This article is for information only and does not constitute advice. Please obtain professional advice before taking out a mortgage. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

All information is correct at the time of publication.

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