Some 31% of borrowers who went direct to a mortgage lender were unaware of how their search for the best deal could have been aided by a mortgage adviser, according to a new study.
Indeed, the research from the Legal & General Mortgage Club points out that thousands of borrowers are paying more than they need to by not seeking independent advice.
The findings show that 69% of borrowers who went straight to a lender hadn’t remortgaged in the last five years and 74% stayed put because they felt they had ‘a good deal’. However, mortgage advisers are able to offer potentially thousands of different deals, meaning that borrowers are missing out by not fully exploring their options.
Legal & General Mortgage Club plans to use the research in a bid to change people’s perceptions about the role of a mortgage adviser, whilst raising awareness about how borrowers can benefit from tapping into their full range of services.
The analysis demonstrated that the benefits of gaining mortgage advice still needs to be more widely acknowledged, with just 30% of those who went direct to the lender saying that they would likely speak to a mortgage adviser next time.
A further breakdown of the findings shows that, when taking out their last mortgage, 60% of borrowers didn’t know that part of a mortgage advisor’s role is to assist the borrower, while 34% believed that they operate mainly on behalf of the lender.
Borrowers going through a mortgage adviser have access to thousands more mortgages than those going direct to the lender, including specialist mortgages for the self-employed and later life lending solutions such as lifetime mortgages.
Indeed, data from mortgage sourcing platform Twenty7Tec shows that almost 12,000 mortgages are available through mortgage advisers, compared to just over 2,000 directly on offer from lenders to consumers.
Meanwhile, 29% of borrowers who sought mortgage advice have switched in the last five years, and this figure drops to just 19% for those who went direct.
The average interest rate paid by borrowers on a two year fixed term mortgage fell from 2.6% in June 2014 to 1.47% in June 2017, so borrowers who have opted for a new deal in recent years will have been presented with opportunities to pay less interest.
Additionally, almost all, some 98% of those who dealt with a mortgage adviser felt that their advice and support had been ‘valuable’, and 95% qualified this further by suggesting that they would urge their family or friends to consider using a mortgage adviser.
‘Whether someone is taking out their very first mortgage or unlocking housing wealth in retirement, the value that mortgage advisers can bring to borrowers can make a huge difference when it comes to moving onto and up the property ladder,’ said Kevin Roberts, director of the Legal & General Mortgage Club.
‘Yet, our research shows that potentially thousands of borrowers still don’t know how a mortgage adviser can help with their mortgage search and as a result they could be missing out on a better deal,’ he pointed out.
‘The figures speak for themselves. Those who used a mortgage adviser when they took out their last mortgage would overwhelmingly recommend their family and friends to seek independent, professional advice. They’re also more likely to switch their mortgage product and when they do borrowers can have access to nearly six times the number of products available than if they went direct,’ he added.