You might wonder what brought me to ask you such prominent question on a sunny August morning… Well I have been doing some reading again and came across the following survey results produced by GoCompare:
According to the survey, of those people who bought their home insurance through their mortgage lender, a shocking 30% – almost 500,000 home owners- believed buying their lender product was a condition of the mortgage deal. What’s more, 24% of borrowers who arranged their insurance with their lender believed that if they switched to another provider this will invalidate their mortgage. Perhaps even more shockingly, 12% of these customers said they felt under pressure to buy their lenders product and 6% said they were actually told by their lender they had to.
Now, I found this shocking that there are still consumers out there who would still go to their lenders directly without shopping around or seeking advice. Especially that a mortgage, for most of us, is the biggest financial commitment we have. In the words of Jason Berry of Uinsure this is the equivalent of a motorist pondering ‘shall I shop around or just buy the first car I see’.
As a mortgage broker with access to lenders across the whole marker, I have to ask whether this is because some consumers still don’t understand the difference between the lender and a mortgage broker. Just in case you are not sure about this I enclose an explanation below:
A direct lender is anyone that can offer a mortgage, including commercial banks and their representatives can only sell that particular company’s mortgage products. To put it plainly, they can only show you the products they are given – from one company. Although there may be a rather large number of products, they are limited as to what the company offers.
A mortgage broker, on the other hand, would have at his or her disposal, an extremely wide selection of products because they regularly deal with many companies. In fact, a mortgage broker can represent a couple of hundred different companies, and therefore would be able to offer many hundreds of different mortgage options based on your requirements and circumstances.
I hope this has given you a better understanding and will help you make a different choice next time you are looking to re-mortgage or buy related insurance products.
Your property may be repossessed if you do not keep up repayments on your mortgage.