Joint project to cut out mortgage fees jargon and help buyers
Consumer campaigners and lenders are working together to improve transparency around mortgage costs to help people work out the best deal for their needs.
The project will take six months to complete and Which? and the Council of Mortgage Lenders (CML) will produce a progress report in time for next year's Budget. Previous investigations by Which? have found more than 40 different names for fees and charges across the market and warned that consumers are at risk of paying over the odds for their home loan due to their vast array and complexity.
The different names it found include 'administration fees', 'application fees', 'assessment fees', 'arrangement fees', 'booking fees', 'product fees', 'reservation fees', 'lenders' fees', 'completion fees' and 'mortgage questionnaire fees'.
Which? has been running a "stop sneaky fees and charges campaign", calling for an end to fees across the financial sector that are hidden, excessive or make the total cost difficult to understand and compare. More than 45,000 people have signed up to support the campaign so far.
The project will look at how fees are presented, the different terms used for fees and charges and how admin charges can be set so that they reflect the cost to the lender. It will also look at consumer education.
Which? executive director Richard Lloyd said: "We look forward to working with the Council of Mortgage Lenders to simplify the wide range of complicated fees and charges in the market so that borrowers don't pay over the odds on their loan."
CML director general Paul Smee said: "With the largest and most competitive mortgage market in Europe, UK customers are well-served for choice. We recognise that for this choice to bring the greatest benefit, consumers need to be able to understand and compare products confidently.
"We welcome the opportunity to work with Which? towards measures that can make this easier for them."
Last month, Northern Ireland's Progressive Building Society announced that it had partnered with the Plain English organisation to make its mortgage guides simpler, following research that 61% of people do not understand common financial terms.
UK research from the Money Advice Service has shown that people have difficulty understanding financial language, with 84% not even reading financial terms and conditions.
Declan Moore, operations director at Progressive Building Society said that the process of applying for a mortgage should be as straightforward as possible. "Throughout the process we engaged and worked closely with the Plain English team to re-write our mortgage guide which is aimed at helping consumers navigate their way through the sometimes confusing world of financial jargon." he said.