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Eligibility apps can create consumer confidence but will not replace quality advice – analysis

  • 17/12/2019
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Eligibility apps can create consumer confidence but will not replace quality advice – analysis
A number of apps promising to help borrowers better understand their potential eligibility for a mortgage are currently on the horizon.


Hoping to go one step beyond a credit score check, some of these apps will give consumers an insight into why they may not meet criteria and give them advice on the steps they can take to ensure they do. 

The Financial Conduct Authority has championed Open Finance saying it would put more people in control of their finances and “empower” them to engage with a wider range of financial services. 

But taking into account the general lack of education around mortgages, will a financially savvy consumer be easier to advise? And considering many people assume they will not be able to get a mortgage at all, will these technological developments give people the confidence to approach brokers when they would not have done so otherwise? 


Advice always needed 

The Mortgage Solutions respondents said while it may mean more borrowers will see them already having an idea of what they wanted, gaining further insight would not reduce the amount of advice they would receive. 

Akhil Mair, managing director at Our Mortgage Broker, says: “We like to think that all our clients know their financial circumstances, however, just to make sure, we tailor our advice based on the clients’ previous, current and future financial and personal circumstances. 

He says although a client may have an idea of what they want, it is “imperative” that all bases are covered before an adviser submits a full mortgage application. 

Chris Sykes, mortgage consultant at Private Finance, adds that while financially sophisticated clients may make the advice process easier as they will come to a meeting with products in mind, it is important to treat all clients equally and make sure to “ask the necessary questions to make informed decisions”. 


Information is simplified 

Steve Seal, managing director at Bluestone Mortgages, acknowledges that although technology has been “revolutionary” in giving consumers greater access to their financial data, this does not usually go far enough to address the needs of the growing demographic of those with complex borrowing requirements. 

He says: “Eligibility tools are typically geared towards ‘vanilla’ borrowers. There’s a danger that these tools will quickly be seen as unreliable for growing segments of underserved borrowers.” 

Sandy Ameer-Beg, adviser at Mortgage Consultancy, agrees. “It depends on the app and the user. You have to be careful because those apps are only giving them a certain level of information,” she says.  

She adds that certain credit score services will give users the impression they will be eligible for a mortgage, while others will classify them as not being eligible, suggesting existing tools do not always point consumers in the right direction. 

“It depends what information is behind these apps and if it’s the same thing lenders are seeing. 

“People see me and say, ‘I’ve done an affordability assessment online and I can borrow this’ or ‘I’ve done a decision in principle by myself’. But what they probably haven’t done is take away the things a lender would, so I don’t think we’re at the stage where it’s going to replace quality advice,” Ameer-Beg adds. 


Building consumer confidence 

Ameer-Beg says even though the information garnered on some of these apps may be vague, “if it gives a person the confidence to talk to us, that’s brilliant”.  

Conversely, Seal describes any move to help more borrowers understand the financial options available to them as a “good thing” but says a simplified approach could be “hugely detrimental” to the confidence of those who are excluded due to adverse circumstances. 

This needs to go beyond those with a perfect credit score, he says.

As well as embracing new technology, brokers and specialist lenders need to help to educate more borrowers, signposting them towards the solutions and options best suited to their circumstances.


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