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Should mortgages be added to the school curriculum?

Should mortgages be added to the school curriculum? 40

Five out of six homeowners don’t understand their mortgage – yet many have never sought the assistance of a mortgage broker

Research has revealed that only one in six homeowners (17 per cent) say they understand the details of their mortgage.

When mortgage broker Boon Brokers questioned 1,100 UK homeowners to find out how much they understood about mortgages, 83 per cent said they weren’t sure how their home loan worked in terms of fees and interest rates.

One in 12 (eight per cent) admitted they found mortgages very confusing – a figure which was higher with younger homeowners aged 18-24 (13 per cent) as opposed to only three per cent of mortgage holders aged over 65.

It’s no wonder, therefore, that one in five mortgage holders (22 per cent) think mortgages should be on the curriculum at school.

But despite the lack of understanding, well over a third of mortgage holders (39 per cent) have never used a mortgage broker – even though a good one could explain products to homeowners and help them choose the best one.

Mortgage broker fees can be a source of concern for homeowners, with fees varying widely. Boon Brokers questioned 44 mortgage brokers across the country which revealed six out of 10 do charge clients a fee. The average amount was found to be £559, but some charged more than £1,000. This is despite all the mortgage brokers questioned admitting they also get a procuration fee from the lender.

A mortgage is likely to be the biggest financial commitment you enter into, and as such you want to choose your mortgage deal wisely. Working with a good mortgage broker can help make the process much easier. But what are the key things to consider when looking for a mortgage broker?

  • Ask family and friends who they have used. Word of mouth recommendations will often be the best way to find someone you’d feel happy using.
  • Don’t equate paying a fee with getting a better service – the two do not go hand in hand. All brokers receive a procuration fee from a lender when you take out a mortgage so many do not charge you additional fees directly.
  • Be clear on what fees may be payable and how they may vary. However, be careful what you pay for as not all mortgage brokers charge the same fees. Some mortgage brokers operate on a fee-free basis for their clients, as they are paid a commission from the lender.
  • Find out whether you’re tied into your current mortgage – or if you’re on the dreaded SVR. It should be relatively easy to find out when any fixed rates you are tied into finish. You want to make sure you switch at the end of the deal rather than getting stuck on a standard variable rate, which will cost you more. If you use a broker, they’ll be able to flag to you every time your mortgage deal comes to an end, so you never pay more than you need.
  • Make sure any mortgage broker you use has whole of market access. This means they have access to every lender on the market and can therefore find you the best possible deal available to meet your individual needs.
  • If you have tricky circumstances, a broker will be essential. A broker will be particularly useful if you have any unusual circumstances like a bad credit rating, you’re self employed or have some other situation which may unsettle the lender.
  • Make sure you do your research. Check independent review services like Trust Pilot and Feefo. Are they consistently rated excellent?
  • Trust your gut feel. You need your broker to be someone you feel you can rely on, who understands your circumstances and has your best interests at heart. If you feel uneasy or don’t really like the individual, you’d be better looking again.
  • Ensure your broker is authorised and regulated by the FCA (Financial Conduct Authority). This should either be directly or through a network. This provides you with vital protection if you are given poor mortgage advice.

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