When comparing mortgages you might seek out a deal from the biggest and best known mortgage lenders. However, some of the smaller and lesser known lenders could still have a good deal, depending on what it is you're looking for.
When it comes to the largest mortgage lenders in the UK, not all of them will have a full range of mortgage options.
When we speak of the largest or biggest mortgage lenders, we are usually speaking about the lenders who have a history or lending the most amount of money.
In the UK, the largest mortgage providers are:
Royal Bank of Scotland (RBS)
This corresponds closely to the list of the UK's 'big four' banks: Lloyds, Barclays, RBS and HSBC.
Specialist mortgage lenders usually hire people who are experts in dealing with specialist and uncommon circumstances. They are likely to have experience in lending to those people and therefore have better knowledge and understanding of the risks.
This means that when you do apply for a mortgage from a specialist provider they will be more likely to be able to assist you.
On the other hand, the biggest mortgage lenders have larger amount of cash available to its customers – but only those they approve.
They are also likely to be less risk averse than other lenders, and therefore will be more calculated and thorough when checking to see if your application should be approved or not.
Speaking to a mortgage broker might be your best option in finding a mortgage if you have special or uncommon circumstances – and it could also be helpful even if you have a good credit rating and a regular income.
Comparing mortgages is complicated and it can take hours to find a good deal. Even when you do eventually find one, it's hard to know whether that deal really is good enough or not.
More importantly, how can you be assured that any deal you do like the sound of is actually going to be suitable for you and your circumstances – not just now, but in the future too?
The short answer is that you can't really ever be assured of that. Finding a mortgage, whether you do it alone or through a broker, always requires careful planning with your finances. That also applies to whether you take out a mortgage with a 'big four' lender, or a smaller, specialist one.
Planning how you will repay your mortgage is necessary whatever method you decide to choose for comparing them.
A mortgage broker can make things slightly easier than, say, simply going into your current bank and asking them for one. Banks are unlikely to be impartial, simply because they want you to commit all the money to them, rather than one of their competitors.
Mortgage brokers on the other hand, under financial regulations, are required to help you find a mortgage that will be suitable for you and your circumstances.
If something goes wrong with your repayments and it can be proved that it was due to its unsuitability, then the broker can be held liable for recommending that mortgage.
Before speaking to a mortgage broker, check if they cover 'whole of market' – meaning they simply cover everything on the market. Many will offer their services free and take commission from the mortgage lender, but others will charge you instead.
Looking for a mortgage from one of the biggest lenders should not be your first option. Compare the mortgage market, do your research, and always look ahead to the future when planning your budget.
Following the 2008 recession mortgage lenders were forced into making more stringent checks on mortgage applications, which include affordability assessments.
These checks no longer simply ask you for your salary but also take a look at your bank statements to understand what your monthly outgoings are like.
So if you have a monthly gym membership, or even a Netflix account, that might end up being factored into your application and ability to pay back the mortgage.
Your circumstances might also be a major factor in deciding which bank you go to. Some banks will have better deals on fixed rate mortgages, and some will have better rates on tracker and variable rate mortgages.
Additionally, you may have special personal circumstances, such as a low or bad credit rating, or be registered self-employed or be older than 60 – all elements that are likely to make it harder to borrow – which could limit the type of bank or mortgage lender you speak to.
Unfortunately, the biggest mortgage lenders are usually not the best lenders for people looking to buy a home despite having a low or bad credit score. The same goes for those who are self-employed or do not have regular income.
Although all banks and mortgage lenders are bound by stringent financial capability assessment checks, the bigger lenders focus on the most common types of borrowers, i.e. people with good credit scores and stable, reliable incomes.
So if you have unusual financial circumstances, it might still be hard to get approved for a mortgage elsewhere, but you will improve your chances of approval when you look for a specialist lender.