One stop shop mortgages available from estate agents

FOR THOSE thinking of moving house in 1996, the popular weekend past time of visiting show houses and viewing secondhand homes begins in earnest next month. But aside from the usual property descriptions and potted notes on the neighbourhood, prospective buyers may find another handout being given out by the estate agent handling the sale - the opportunity to arrange the finance on the property directly from them.

The idea of getting your loan from the same person who has sold you the house or apartment certainly enticing, since it means no fretful visits and telephone calls to the bank or building society, to officials and managers who you may never have met before and who can appear very intimidating, especially to first time buyers.

The larger estate agents like Sherry Fitzgerald, Gunnes, Lisney's, Hamilton Osborne King, etc, are counting on this still widely held, if perhaps outdated view of the mortgage lender to attract clients into their relatively new mortgage services divisions. The image may be out of date, but financial institutions can seem very daunting, especially if your personal or financial circumstances are in any way unusual or inadequate.

For many, the most important reason to use an estate agent - rather than even a more conventional mortgage broker who specialises in home loan finance - is that you are eliminating at least one middleman and saving what may be even more pressing than money - time.

"The whole deal can be done through us, and there can be a very quick turnaround time," explains Vivienne Brophy, Sherry Fitzgerald's newly appointed mortgage services manager. "We handle the entire process from the application stage, and because we have established good relationships with the building societies and banks, many of which now have designated managers who deal with intermediaries, we can secure very competitive rates".

Joe McPeake runs the mortgage services division of Hamilton Osborne King. He says the good relationship that agents can establish with lending institutions should not be underestimated. He cites one example, of a client who recently bought a very expensive house: "Because he was over 40, the mortgage protection insurance ran into several thousand pounds and we were able to negotiate a better deal with the life assurer to reflect the fact that he was going to make substantial loan repayments in the first few years and lower ones later. The deal saved him a lot of money.

The main advantage of using such services, says Mr McPeake, is that "we are very close to the entire buying process - the negotiations, the legal end of it, the closing time, etc" which can cut down not just on the time it takes to buy a house but on the anxiety of dealing with so many different people - sellers, surveyors, lawyers - as well as the lender.

First time buyers are often targeted by the estate agent cum mortgage broker who can offer to handle any grant applications in addition to the loan financing. Another category of buyer attracted by the one stop" package is the overseas or out of town buyer, who is usually pressed for time and sometimes needs to complete the sale in a matter of days. Only a broker with a good working relationship with a lender can pull off such a quick deal, Mr McPeake says.

Most mortgage brokers, including estate agency ones, have a shortlist of preferred lenders, a relationship they say is based on flexibility, good service and most importantly, keen rates.

However, clients should always establish at the outset if there is any kind of tied or linked arrangement between a mortgage broker and any particular lender for passing on business. You can then determine whether or not the recommended loan is the appropriate one for you.

Family Money understands that "upfront" fees are not charged by mortgage service divisions of the main estate agents, and while it is understood that finders fees are paid to intermediaries by many of the lenders, mortgage rates are very keen at the moment and most brokers seek the most competitive rate. The real estate/mortgage brokers make their money not so much from the actual arrangement of the mortgage, but by arranging mortgage protection and building/contents insurance for their clients. Any mortgage broker worth dealing with, though, will provide a comparative table of such rates to assure you that you are paying the most competitive premium for your age and other circumstances.

Since mortgage brokers are mainly remunerated by commission, prospective clients should remember that brokers earn substantial commission from endowment mortgage packages. Unit linked endowment policies in particular have proven to be poor value in recent years, mainly because of the high cost structure of the contract, relatively volatile investment markets up to recently, and because most people are unable or unwilling to keep paying premiums for the entire 20 or 25 year period of the loan. Anyone considering an endowment mortgage should seek out an independent, fee based financial adviser for a more objective view.