And whether they truly represent the most suitable option for their needs.
Paradigm believes many potential first-timers may be actively considering the mortgage options available to existing or new current and saving account holders as these products are often advertised and marketed at increased maximum LTV levels.
The warning comes following a spate of new direct-only offerings from lenders to first-timers if they are either existing current account holders or if they opt to switch their current account or open a specific savings account.
Paradigm has urged brokers to outline the significant number of caveats that come with such mortgage product options, most notably, the fact that there is no guarantee that first-timers who hold, or open, these accounts will actually be offered mortgage finance.
Bob Hunt, Chief Executive of Paradigm Mortgage Services, commented:
“While we all welcome lender action in attempting to get more first-time buyers onto the property ladder, we firmly believe that any potential borrower should be speaking with an independent mortgage adviser before making any decision about opening a linked account.
"Many individuals who have struggled to secure finance in recent times might think that opening a current or savings account with a lender offering a high maximum LTV is the answer to all their prayers.
"The fact of the matter is that there are no guarantees when it comes to securing mortgages linked to such accounts and the individual would be far better speaking to an adviser in order to ascertain at the outset their mortgage affordability level and whether they are likely to be accepted.
“There is also the major issue of whether there are any better, and more suitable, deals available for the individual which are not dependent on opening accounts with that provider.
"Only whole of market brokers will be able to ascertain the true situation for first-timers and therefore we are urging brokers to get this message out into the market and ensure that first-timers do not waste time, energy and potentially money in the search for mortgages which they are never going to be eligible for.”
