Why online mortgage comparisons can be so vastly different

The brief answer is that they all use different ways to make their calculations; in a bid to attract your business, information is sometimes presented in such a way that it makes a product seem the most affordable option when, in reality, not all the necessary data is there to enable you to make an informed choice.

Some years ago, the financial services regulator introduced what are known as APRs – Annual Percentage Rates – to try and make it completely transparent how much a client would be paying back on any form of borrowing in the UK.

However, the guideline can be misleading, especially when it comes to mortgages where the rate may change many times over the mortgage period and there are lots of potential associated fees.

For example, if the right thing for you is to have a two-year fixed rate mortgage product, what is most useful for you to know? Is it the cost of that mortgage and any associated costs setting it up for that two year period? Or is it a hypothetical overall cost for the next twenty-five years, assuming a rate for the following twenty-three years after your initial deal ends is based on current market rates and assuming you will stay in the same place, never overpay, never miss a payment and never secure another fixed or reduced rate?

It’s a dilemma, isn’t it? Of course, officially the latter should be quoted to you. However, the former is probably a more accurate way of working out what you are actually going to pay; certainly for that initial period, after which you and/or your broker can check the market again and renegotiate based on what is then on offer.

Online search engines or aggregate sites, as they are known in the industry, often pitch based on initial rate alone and may not even include costs such as valuation fees; and certainly not potential legal fees or land registry fees. Some do not even factor in the lenders’ product fees to their calculations.

The good news is that if you use a good broker, we will always use the TAP figure, which stands for Total Amount Payable, to ascertain the real cost of the mortgage product we have recommended to you.

April 2019