One-tenth of homebuyers in the UK who purchased their home from an estate agent felt pressured into arranging their mortgage via the estate agent as well, according to newly-published data from the Office of Fair Trading (OFT)*.
While mortgage referrals earn lucrative commissions for estate agents, their in-house mortgage advisers typically deal with a limited panel of selected mortgage lenders.
In consequence, customers may be advised on only a small portion of mortgage deals available, and denied access to independent, ‘whole-of-market’ mortgage advice – potentially adding thousands of pounds to their annual mortgage costs.
Of those homebuyers who went with their estate agent’s mortgage adviser, 5% did so because they were told this was compulsory, and another 5% did so because their estate agent told them it would be cheaper or faster to use his recommendations and ‘tried very hard’ to persuade them, according to the report.
Of all homebuyers in the survey who had been passed to third party service providers, 18% felt they had been subjected to a ‘hard sell’ by their estate agent in relation to mortgage advice, insurance products, surveyors or solicitors, the Office of Fair Trading revealed.
Going with a tied adviser, as opposed to an independent mortgage adviser who can look at the whole mortgage market, can add on average £962 per year to the cost of a mortgage.**
Independent mortgage advice results in a better deal in 90% of cases, when compared with dealing with a tied mortgage adviser.
An independent mortgage adviser taking a ‘whole of market’ approach can potentially access many thousands of mortgage products, whereas a typical ‘tied’ adviser has access to a range of just 20 mortgages.Â
*â€Home Buying and Selling Market Study 2009†Office of Fair Trading, November 2009. Crown Copyright
**Report ‘The Value of Mortgage Advice’, Association of Mortgage Intermediaries, 2009
