A mortgage should be regarded as a financial planning tool to help people at different stages of their lives, according to industry figures speaking on IFAonline TV.
Speaking as a special guest for this latest edition of IFAonline.tv - entitled the Great Homeowner Debate - Michael Coogan, director general of the Council of Mortgage Lenders (CML), told the panel of financial intermediaries mortgages should not be seen in isolation but should be treated as part of a financial planning tool people include in their financial needs assessment, at different stages of their lives.
Likewise, Ray Boulger, senior technical manager at John Charcol, believes consumers will increasingly use their houses as financial planning tools and says the increase in offset and flexible mortgages gives an opportunity for “financial sophistication”.
He suggests the development means the need for mortgage advice is even greater, stating it cannot be assumed a client who says they want a particular type of mortgage is correct.
“We have the obligation to discuss the different types with them,” Boulger adds.
In particular, he says consumers often pick fee-free mortgages without realising some have higher interest rates.
Similarly, Simon Tyler, managing director at Chase de Vere Mortgages, points out the vast amount of information available on the internet means consumers often self-diagnose, but he warns they sometimes confuse information with knowledge.
He states: “We’ve been doing the job for a long time - we’ve seen interest rates and house prices go up and down. Consumers need an IFA.”
But Nick Baxter, managing director of Mortgage Promotions, says the availability of information for consumers means they are better informed when they meet an IFA, which helps the end result.
He adds: “Independent advice is increasingly important. There are hundreds of lenders out there. The IFA is the right person to find the right products.”
A particular area of confusion for consumers is APRs, but Coogan says the European Commission is launching a working group to create a definition of APR for the whole of Europe.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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