First-time buyers blind to property finances
Tuesday, 25 Apr 2006 17:33
First-time buyers do not realise the full financial implications of mortgages [photo:Pixmedia]
First-time buyers are oblivious to the full financial implications of owning a home, new figures suggest.
A study from IFA Promotion reveals that seven new homeowners in ten are either completely unaware of the other financial products that go with a mortgage, or would need advice on them.
But this ignorance is not holding them back, with more than three first-time buyers in four (78 per cent) taking out one or more insurance or investment products to go with their mortgage.
Additionally, mortgage advisors might not be able to give independent advice.
IFA Promotion points out that while independent mortgage advisers can offer independent advice on mortgages, they might offer ‘tied’ advice on affiliated products.
Only a mortgage IFA is able to offer impartial financial advice across all the financial products that are part of the homebuying process.
"Buying a home and arranging a mortgage is often a daunting experience, especially for first-time buyers, and the fact that so many people do not fully understand the full complexity of associated financial matters comes as little surprise," said Karen Barrett of IFA Promotion.
"However, for many, it is also the single largest financial commitment they will ever make, and consequently one of the key triggers to consider other financial products.
"We are therefore warning that people apply caution when seeking expert advice in this area."
Typically, new homeowners will look at life insurance policies, to pay off the mortgage for loved ones if the worst happens; income protection or other similar policies to cover the mortgage repayments in the event of illness or injury; buildings insurance; and endowment policies or other investments to go with interest-only mortgages.
The average first-time buyer takes out 1.4 extra financial products to go with their mortgage.
To get a free copy of IFA Promotion’s mortgage guide, go to
www.impartial.co.uk/find-a-mortgage-ifa/guides
To find an IFA near you, click here.
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