Alan Selkirk, managing director at Bias-Free Advice, believed brokers were not able to give best advice because the difference between two products, which may look to be the same at the beginning, may be quite different when the broker goes to remortgage.
He calculated the difference between a product with a low rate and high fees and a higher rate and lower fees could be over £2,000 over a three-year period.
Selkirk said: “There has been a move towards higher fees and lower rates by some lenders when they used to all just compete on rate. On the sourcing system, a 4.50 per cent and 5.50 per cent deal, with different fees, may come to the same level but one is repaying the capital back faster so even though they have the same cost at the start, one’s paid off £1,900 more. That is without including differences in exit fees.
“Could you defend a complaint against you where you had used total cost over three years, as requested by the client, but later it was found to be incorrect by over £2,000?”
Richard Angliss, managing director of Homebuyer Systems, said: “Sourcing systems are very good at sourcing products but they only look at the criteria and not the circumstances. They assume the client wants the cheapest mortgage product but different customers have different needs.”
Mark Lofthouse, CEO of Mortgage Brain, said: “This has been a standard feature of our system for years, and mortgage intermediaries can specify the number of years they want to compare cost over.”
