Mortgages made easy ... online brokers make the process hassle-free. Photograph: Alamy Mortgages The online brokers tak
They market themselves as a hassle-free way to get a home loan, where you don’t pay anything to use their services and computers do much of the legwork. So is it time to give a digital mortgage broker a spin?
These online firms tend to have quirky one-word names – Trussle and Habito are two of the best known – and typically claim they are able to search through thousands of mortgage deals to recommend the right one for you. Some of them, such as Habito, involve you having a conversation with a chatbot.
A report out this week gave this new breed of mortgage broker the thumbs-up, and a quick test by Guardian Money found these sites well worth a try, even if it’s just to get an idea of how much you would be able to borrow and the most competitive deals for people in your position.
Until a couple of years ago, if you were thinking of taking out a mortgage but didn’t know which one to go for, you could try to fathom the best deal from a set of generic results on a price comparison website, or you could go to a traditional mortgage broker – one that either offered fee-free advice or that charged you – to do the searching on your behalf.
However, the new breed of online brokers claim their cutting-edge technology makes finding and applying for a mortgage a quicker and slicker experience – and as a customer you pay nothing for the service. Just like a traditional broker, the websites receive a fee from the lender when the borrower completes their home loan.
Launched in December 2015, Trussle was the first online broker to set up in the UK. It was quickly followed by others, including Habito, Dwell (which recently changed its name to Burrow) and MortgageGym.
Andrew Hagger of website Moneycomms.co.uk has authored a report on the sites, commissioned by one of the new players, Burrow, which has recently launched a television advert featuring a kangaroo. He says that while they all have the same intention – to save consumers time, hassle and money by quickly pointing them in the direction of the most suitable mortgage product – they work in different ways.
He says Burrow, Trussle and MortgageGym search the full market for broker products across 90-plus lenders, though with Trussle there are no help-to-buy deals available yet, and MortgageGym only offers a service for remortgage customers (it aims to include first-time buyers and home movers by the end of this year). Habito, meanwhile, has access to more than 70 lenders but doesn’t offer products from a handful of big names including HSBC, First Direct, TSB, the Post Office and Tesco Bank.
“All four of these players are pretty good in their own way,” says Hagger. He adds that they offer a decent alternative for consumers, in particular those who want to be pointed in the right direction in a matter of minutes rather than having a lengthy face-to-face meeting.
However, Ray Boulger at traditional broker firm John Charcol, says of the digital 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 aspects of getting a mortgage that can be improved upon, when it comes to the actual advice process, “people value talking to a human” and the skill of a flesh-and-blood broker is in “being able to ask the right questions”.
Money gave the four sites a quick go. We used a made-up case study: a couple, both 49, with two teenage children, living in a £500,000 three-bedroom home in east London, who are looking to remortgage and have an existing home loan of £200,000. They have recently come to the end of their deal and are looking to fix their monthly payments. He earns £40,000 and she £20,000. Their monthly payment is currently £1,000, which is probably unrealistically low, but we wanted to throw down the gauntlet.
This site asked our couple a lot of questions, including how much each paid into a pension, which not everyone would know off-hand. The site was easy to use and at the end of the process – which took around 10 minutes – our couple were awarded a mortgage score of 1,000 out of 1,000. This sounds a little unlikely. The site told us that if the couple remortgaged to a Barclays two-year fixed-rate mortgage with an initial interest rate of 1.29%, they would pay £910.95 a month – a monthly saving of £89.05. However, this deal has fees of £1,114. Alternatively, the couple could switch to a Halifax three-year fix priced at 1.44%, where the monthly payments would be £924.76 and the fees £999.
One useful feature of the site is that it tells you how much you can borrow from particular lenders, which gives you an insight into which ones are likely to be looser with the purse strings. According to Burrow, Halifax would lend our couple £285,000, while Santander would lend £243,786.
This website was also user-friendly. We keyed in various bits of information, including how much our couple earned and the state 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 a month. The fees were estimated at just £35. Habito also told us that the maximum borrowing amount was £330,000. If you want more than this quick overview, it’s then over to the company’s (human) mortgage experts for an online live chat.
The site says you can “complete your profile to receive a personalised mortgage recommendation”. This involves answering a few non-intrusive questions – it only took us a minute. Trussle subsequently told us we could move to a two-year fixed-rate deal at 1.39%, where our monthly payment would be £916 – a saving of £84. But it did not say which lender was offering this. To get more details around the mortgage we would have had to answer a lot more questions. We started 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 promises to find up to four deals you are likely to be accepted for. But some people may be put off by the fact that it wants a lot of personal information: name, date of birth, address, income, etc. The service then does a “soft search” of your credit file. This type of credit check is not visible to lenders and can only be seen by you, it says. There are then lots of human experts on hand online to help with the application.