The Choice Paradox

The Choice Paradox

9:28 AM, 13th January 2015, About 10 years ago 2

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choice paradoxIsn’t it odd how we all want more and less choice at exactly the same time?

Take an evening spent at the local restaurant. How often have we picked up the menu and unfolded it so many times that the sheer magnitude of choice suddenly becomes overwhelming? As a result it becomes almost impossible to make a choice but to make matters worse when you do decide, you end up choosing something you’ve had before rather than “stress” about choosing something else?

Another ploy we use is to get a companion or member of staff to choose for you. “Shall I have the steak or the salmon”? All in all, the choice becomes a burden rather than an advantage.

The opposite is also true though. What’s worse than visiting somewhere to eat and finding a single sheet of paper with only two starters, two mains and two desserts to select from? Here the reverse is true. Where is our “choice”?

So there is a problem. We want more choice but struggle to make these choices when they are available. Or, we want less to choose from but feel “cheated” when the choice is so small.

What does this have to do with property?

When you come to choosing a mortgage you feel the same way. Ideally we want to find a way of sitting somewhere in between the two points above to still give us the Best Choice.

If you are looking for a mortgage, you want to look at as many options as possible. That should involve all the High Street Lenders, all the Building Societies, all the Banks, in fact anyone who would consider lending against the proposal. If that was a menu that’s a huge document to take a look at and for the unqualified, inexperienced and often time starved individual, almost impossible.

As above, you can start a new search with the best intentions but as the format of websites and documentation differs between lenders, as you begin to find some sites too difficult to navigate, as the terminology begins to contradict each other it becomes that menu again. You think about an easier option, a less time consuming option, you seek familiarity and often your extensive search has become content with the familiar.

There are some who can take time out to research, can invest the time but making a choice isn’t always as simple as it looks.

Let’s go back to that menu. To search with all those parameters in mind let alone understand them all isn’t simple. That’s why we often ask the Sommelier what wine we should choose to accompany our meal. We ask someone in the know, someone with knowledge of the menu and the wines he can offer. We seek advice from someone in a better position than us to make a choice on our behalf. Let’s be honest, they rarely get that choice wrong. That’s what a mortgage broker does.

Lastly it’s not just about your single mortgage transaction. We see any relationship we take on as being a long term and mutually beneficial one. Like the restaurant with the menu we want you to come back, to try new things and we can guide you through that process.

Mortgages and menus are more difficult than they first seem. In an age when even the simple can be complicated, make use of someone who can guide, assist, recommend and advise.

Enjoy the meal but without the hassle.

Contact Mark Alefounder

Mortgages, Commercial and Bridging Finance, Life Insurance, Wills, Trusts and LPA's

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Neil Patterson

9:44 AM, 13th January 2015, About 10 years ago

Interestingly a lot of readers I speak to want no choice and frequently just ask what is THE best product.

Obviously there is no answer to this but does go towards proving your point.

Howard Reuben Cert CII (MP) CeRER

10:10 AM, 13th January 2015, About 10 years ago

What is the definition of "the best product"?

Best rate does not always mean best deal. Best arrangement fee does not either. Lowest early redemption penalties costs may be the deciding factor, or maybe portability is key? What about maximum age, or ability to have future further advances, to be able to overpay, or take payment holidays, to have free legals and no valuation fees, or vice versa?

Mark's menu analogy certainly does prove a point, i.e. that people who simply want the best rate may be inadvertently buying in to a deal that is restrictive, and overall more costly ... and therefore leaves a bad taste in their mouth!



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