Google, one of the most successful companies in recent years, has given up its mortgage comparison site in the UK – before it properly got started.

The trial version, UK Compare Mortgages, was suspended last year and completely axed this month. The closure follows the shutting down of a US version that ran for 2 years.

A spokesman for Google said that the UK site had ‘not been as successful as we would have hoped.’

The problem with comparison sites for mortgages

The mortgage market does not need another comparison website. Because comparison sites always starting with the lowest rate, they are flawed.  To qualify for the eye-catching deal, applicants usually have to meet 10 to 20 minor hurdles before getting to the stage of worrying about the rate itself.

When looking at comparison sites there is always a tempting and impressive offer, the equivalent of a Rolls Royce or Aston Martin gleaming on the forecourt. But, as with these cars, the standout mortgages are supremely exclusive. They are only available to the very few. It is not until you get to the second or third page in the table that you start to find the products that the bulk of clients require, and for which they are eligible.

Hidden costs

Comparison sites list mortgages by rate. But the rate isn’t the only financial consideration. Fees and redemption penalties are also factors in finding the best product for each individual client.

Most of the comparison sites only take you so far before referring you to an adviser – an adviser who has bid for that business. Why not cut out the hassle and talk straight to an independent financial adviser? Limetree can find you the best mortgage, from the whole market, considering everything, not just the rates.

The Financial Services Authority (FSA) has closed the sale-and-rent-back markets temporarily due to widespread poor practice.

The FSA found that most sale-and-rent-back products, sometimes called sale and leaseback, were either unaffordable or unsuitable and should never have been sold in the first place. The decision came after a year-long review of 22 firms.

Sale-and-rent-back transactions allow struggling property owners to stay in their own homes, by selling them to a company at a discount price. The company then rents it back to them at market rate.

The most common failings found in the review included poor assessment of appropriateness and affordability, bad ordering and timing of disclosure and inadequate record keeping. The FSA also highlighted incorrect information in the rent-back agreements, financial promotions that broke FSA rules, and badly structured sales processes that did not give customers enough time.

A study by Which? In February last year criticised the advice given to sale-and-rent-back customers as ‘woefully inadequate’.

Not in the interest of the homeowner

As I recently commented in the Financial Adviser, the main problem with sale-and-rent-back is that homeowners’ interests are left far behind. A product that should have helped vulnerable households often ended up stinging them. They should have been treated better by the firms involved, but most sale-and-rent-back companies just sell the properties on to maximise their own interests.

The closure of the markets is a good move in that it will protect desperate households from being affected by a product that is not designed in their interests.

If you need any more information about the closure of sale-and-rent-backs, or advice about what to do in your financial situation, don’t hesitate to call us.

Where will standard variable rates move next? Up? Down? It is impossible to tell.

It was good news for customers on Norwich and Peterborough’s standard variable rate recently. The rate dropped 0.5% to 4.95%, the same standard variable rate as Norwich and Peterborough’s new owner Yorkshire Building Society.

On the other hand, it was bad news for Bank of Scotland and the The Mortgage Business customers. These lenders, both part of the Lloyds banking group, increased their standard variable rates by 0.11% to 4.95%.

Standard variable rates (SVR) differ considerably from lender to lender. They are usually set by the board of directors and can be varied at any time. We find that many of our clients have remained on the standard variable rate as there are usually no redemption penalties, leaving them flexible to have options.

But is it time to change?

Many fixed rate and standard rates are now below standard variable rates. Some lenders are offering no redemption penalties, as well as free valuation and legal services. If the difference between the rates is enough, it might not take long to save money, even taking the arrangement fee into account.

Contact us to see if it is worth changing. And from all of us at Limetree – hope you’re having a happy Christmas!

The Financial Times Adviser contacted me recently for a comment on recent research from Santander. The research suggests that first-time buyers have to work much harder to raise a deposit for their first home – or have resigned themselves to never being able to afford one.

But times are slowly changing and you may be surprised what you can afford.

No room at the inn

Average house deposits have reached £37,375 or 17% of the overall property value. The FT article highlights that almost one third of aspiring homeowners have taken second jobs or are working overtime to save up this sort of money.

27% of those who want to buy in the next 5 years would consider taking out a personal loan to raise a deposit, compared with only 4% in 1999. And a third of all people who do not currently own a home think that they never will.

This is no surprise to us at Limetree. As I told the Financial Times, it has become very difficult for first-time buyers to finance their deposit. In our area, there has been a huge increase in inheritance money being used to pay for a home deposit. About a quarter of our business finances the deposit this way, compared to a fifth who rely on savings.

Good tidings of great joy

All is not doom and gloom. The market is slowly brightening up. A few lenders now require only a 5% deposit and others have moved from 15% to 10% deposits within the last couple of weeks. Santander themselves have a range of 10% LTV mortgages.

Also, the rates on high loan-to-value products have started to soften since earlier in the year as more lenders enter this market. These mortgages are often restricted in size and lending areas and will require the applicant to be of a good quality. But better deals are beginning to come through.

Perhaps if you’ve been despairing about unattainable deposits it is time to review your options? If you want to find out, give us a call.

Short term life cover is more useful than you might realise

Life cover and critical illness cover are usually associated with the full term of a mortgage. But it is possible to have cover from a year down to a single day.

Part of its appeal is that applying for short term cover can be a much simpler and quicker process than for a whole life or mortgage term life policy. Some people use it as temporary cover while they go through the application process for longer life products. This is sometimes called emergency insurance.

Short term life and critical illness cover, for typically less than five years, can be taken for various other reasons:

1. Business cover
2. Between employment
3. Bridging loans

As the cover is for a relatively shorter term the premiums are not as high as many people think, due to the low probability of claiming. Of course if you do need to claim during that time, it could be priceless.

Choosing the best life cover depends on your budget, your age, and the amount of cover you want. That’s why you should shop around. Come and talk to us at Limetree – we will give you independent advice about products right across the whole market.