Borrowers fail to recognise value of mortgage brokers

Borrowers fail to recognise value of mortgage brokers

More than half (55 per cent) of UK consumers do not realise mortgage brokers can offer more product choice than banks or building societies, according to Legal and General.

The statistic is published in a report by L&G’s Mortgage Club showing the misconceptions buyers have when it comes to securing a mortgage and the role advisers can play in helping them to find better deals.

Entitled Mortgage Myths – Value of a Mortgage Broker, the report reveals nearly half (48 per cent) of homeowners and prospective buyers who did not use a broker chose not to do so because they felt their bank or building society offered them a good deal.

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Meanwhile, 15 per cent thought they would get a cheaper mortgage by going direct, and almost one in five (19 per cent) ‘didn’t see the value’ a broker would add to their hunt for a home loan.

Almost a fifth (19 per cent) of all respondents surveyed thought brokers and banks had access to the same mortgage products and deals, when, in reality, the number of options available via an intermediary is eight times larger.

According to Trigold, as of 30 October there were 3,721 products available direct to consumers, compared to 29,886 available via brokers.

In addition, one in seven (14 per cent) respondents thought their bank or building society would be able to give them access to the same impartial advice as a mortgage broker.

Less than half of respondents (44 per cent) believed, correctly, that a mortgage broker works primarily for the borrower, with over a quarter (29 per cent) saying they thought brokers worked on behalf of the lender.

L&G has launched an information campaign to dispel the myths surrounding the mortgage process and to highlight the role played by independent advice from a mortgage broker.

The data come from a Censuswide survey of 500 individuals who have bought a home in the last 12 months with a mortgage and 500 first time buyers who plan to buy in the next 6 months between 22 and 29 August.

Jeremy Duncombe, director, Legal & General Mortgage Club, said: “These findings show there are a number of misconceptions consumers hold around the role of a mortgage broker, particularly when it comes to understanding who the broker is there to support.

"As an industry, there clearly is a significant amount of work to be done to change these attitudes, educate consumers and promote the advantages of using a mortgage broker.

“Ultimately, we hope our campaign will encourage brokers and the wider industry to dispel the myths surrounding mortgages and encourage consumers to speak to a professional mortgage adviser, who can guide borrowers and provide best advice when making the biggest financial decision of their lives.”

Ruth Whitehead, principal at London-based Ruth Whitehead Associates, said: “Speaking as an IFA and a mortgage broker, none of my clients have been confused who I am working for. That sort of clarification means our clients do not expect us to have ties with others at all.