Younger borrowers are far more likely to pay for mortgage advice than older borrowers, new L&C research suggests, and often face the steepest charges.
More than nine in ten borrowers aged 18 to 34 paid a fee to a mortgage broker for advice, the survey of 1,000 homeowners found. By comparison, around two-thirds of those aged 45 to 54 and fewer than half of over-55s said they paid for advice.
The type of fee paid for mortgage advice also varies sharply by age. Almost half of younger borrowers were charged a percentage of their mortgage amount rather than a flat fee, a structure that can make costs much more expensive for those borrowing a large amount. Only around one in five people in their late 40s and early 50s said they paid a percentage fee, and fewer than one in ten over-55s did so.
How advice costs can mount up
For those charged a percentage fee for mortgage advice, most younger borrowers paid between 0.5% and 1% of their loan amount. On a £250,000 mortgage, that could mean paying £1,250 to £2,500 in advice fees.
Even when a flat fee was charged, the vast majority of 18–34 year olds said they paid somewhere between £250 and £999 for advice.
Given that most first-time buyers are aged under 35, the research shows that this group is at greater risk of facing higher advice costs than older homeowners who have been through the process before, despite the fact they often have the least financial headroom.
More than half of 18–34 year old homeowners (53%) said they’d felt encouraged or pressured by an estate agent to use a broker linked to the agency. That drops to around one in five (22%) among those aged 45–54, and to just 12% of over-55s.
David Hollingworth, Associate Director at L&C Mortgages, said: “Many younger buyers are already struggling with deposits, moving costs and rising living expenses. Adding hundreds or even thousands of pounds in advice fees only eats into deposit savings and increases the long-term cost.
“The key message is that borrowers do have a choice. Just as good advice can help save money on your mortgage, using a fee-free broker can make a real difference at one of the most financially pressured moments of someone’s life.”
