Confusion reigns over the role IFAs can play in providing mortgage advice, research suggests.
According to a study by lender edeus, almost six in ten consumers would approach their own bank or building society, or a mainstream lender, for advice on buying a home.
The research, taken from interviews with 500 consumers, suggests only 40% would consider a professional mortgage adviser or IFA.
When asked why they would go to a high street lender, 26% said it was because they offered a wide range of mortgage products, 21% said it was easier than going to a broker or adviser, while 18% said it was because their bank or building society already knew their personal financial circumstances.
In addition, the research suggests 14% said they would be able to secure the most favourable rate by going to a mainstream lender and 12% said it was because they have a well known brand name.
Nicola Severn, spokesperson for edeus, says: “With the recent activity in the capital markets resulting in an increase in the cost of adverse mortgages and a potential decline in their availability, borrowers with adverse credit histories are more likely than ever to be in need of professional advice.
“We know from lending statistics that the majority of borrowers come via the intermediary route, but these findings clearly show that there is sub section of society who are confused about the role intermediaries play.
“With huge marketing budgets, and a high street presence that mortgage intermediary firms are unable to match, it is no wonder that mainstream lenders are able to persuade consumers to visit their branches.
“Although regulation and TCF initiatives have made inroads, more needs to be done to educate individuals about the basic areas of mortgage advice, such as payment structures and the varying levels of impartiality.
“These consumers represent an untapped pool of borrowers that intermediaries could target, however a greater degree of education is required – and schools might be a good place for this to start.”
Findings from the survey also revealed considerable confusion surrounding the advice services provided by both mainstream lenders and intermediaries.
When asked which statements they believed to be true of their bank or building society 43% did not recognise that high street lenders would only provide advice on their own products.
In addition, 78% failed to recognise that mortgage intermediaries could provide access to mortgage products that were not available directly from a lender.
Also, 35% of respondents believed that mortgage intermediaries and IFAs always charged a fee, and 20% stated that they did not understand how the process of using a mortgage intermediary worked.
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