Property  

Third of people don't read mortgage T&Cs

Third of people don't read mortgage T&Cs

Brokers have stressed the need for mortgage advice as new research showed nearly a third of consumers do not read their mortgage terms and conditions.

Paymentshield and YouGov polled 1,023 people and found that 32 per cent of those surveyed admitted to not having read the fine print on their mortgage policy.

This shows the need for mortgage advice, according to industry experts, as policies can vary and the details are often found in the fine print.

Rob Evans, chief executive of Paymentshield, said: "Too many people are not taking the time to read and understand critical financial documents — and we are in a position as an industry to help. 

"Having an adviser is a huge benefit to customers. We have an obligation to make the application process as efficient and effective as possible for both advisers and customers."

Ruth Whitehead, of Ruth Whitehead Associates, said she hoped the research was incorrect as a "credit agreement of this importance, held for a long period of time, completely warrants a careful read of the small print".

She added: "Especially within the context of one’s home being at risk if the payments aren’t made as per the contract.

"The implications are considerable, and anyone signing a mortgage agreement should be fully aware of what they’re agreeing to.

"[The research] does illuminate how appropriate and helpful it is to receive proper advice on a mortgage."

But Nick Morrey, product technical manager at John Charcol, said the research didn’t shock him.

He said: "Looking at that statistic, I am surprised it is as low as a third. Human nature is such that consumers rarely fully read terms and conditions, especially online, and simply tick the box to say ‘read and understood’."

Mr Morrey warned without reading all the terms, consumers are likely to miss details about overpayment facilities, generic fees or early repayment charges, which could cause unintended consequences.

he said: "This shows why execution only is a potential risk to consumers."

In the Financial Conduct Authority’s Mortgages Market Study, published in March, the regulator stated it was concerned too many people were being “unnecessarily channeled” into advice.

But advisers branded the comment as a "complete u-turn" on the FCA’s former stance on mortgage advice, in particular advice requirements laid out in the 2014 MMR.

The City-watchdog later proposed changes to mortgage advice rules to help facilitate an execution-only route, including a shake up of the rules surrounding an ‘advice-trigger’ and ‘search and filter’ services, in its consultation on mortgage advice and selling standards published in April.

This paper was branded "deceitful" and "dangerous" by the chief executive of the Association of Mortgage Intermediaries.

Mr Morrey pointed to Paymentshield’s data as good reason for backing advice over execution-only routes.

He said: "There are points that all mortgage advisers have to cover when giving advice and it is for obvious reasons that the full discussion is mandatory.