Mortgage brokers My Mortgage Direct (MMD) are warning borrowers about less scrupulous brokers who are encouraging their clients to take
self-certification and even sub-prime loans.
These kinds of mortgages, attractive to brokers as they involve less effort on their part, can result in borrowers paying far higher interest rates than with mainstream mortgage deals.
Self-certification mortgages have traditionally been used by the self-employed and workers on short term contracts who do not have evidence of a regular income.
But MMD says even salaried employees are being persuaded to take out a self-cert loan, often because brokers are paid a large procuration fee by the lender.
"It is an increasingly common tactic by some brokers - and it is the client who ultimately picks up the bill," states the director of MMD, Cath Hearnden.
"Sadly it's a case of the brokers being greedy as they already get a decent fee from the standard lenders' commission - and in many cases charge a hefty broker fee to the client."
MMD recommends looking more closely at mainstream lenders' deals, as they can often work out better value for borrowers.Click here to find the best mortgage deal for you.
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