Proposals announced today will make it easier for mortgage borrowers to compare the true costs of different deals.
Which? and the Council of Mortgage Lenders (CML) have published a joint progress report to the Chancellor which includes key proposals for improving mortgage cost information.
Under the planned changes, mortgage lenders will have to make their fees and charges clearer by using consistent names.
Which? research in November 2014 found that there are more than 40 different fees charged by lenders across the market, with a wide array of names for the same types of fee.
Mortgage fees to be published
Lenders will also publish their fee tariffs and provide consumers with a better explanation of whether fees are compulsory or avoidable.
Which? research in February this year found that half of those with a mortgage found the language and terminology they encountered when arranging it was stressful. And seven in 10 said they thought the process of getting a mortgage needed to be simplified.
Find out more: Budget 2015: the highlights – the key announcements
Clearer mortgage comparison
Since the Chancellor’s Autumn Statement in December last year, Which? has been working with the CML on plans to improve the information given to consumers about the cost of each mortgage.
In addition to today’s report, over the next few months we will examine other ways to help consumers easily compare mortgages, including whether there’s a clearer way to present costs and whether the total cost of a mortgage over a deal period should be displayed alongside the annual percentage rate (APR).
In a test, Which? found that just 3% of people could correctly rank the cost of five two-year fixed-rate mortgages when displayed using typical information, including APR.
Final proposals and a timetable for implementing the changes will be published later in the year, but the government expects the majority of the industry to have made the necessary changes by the end of the year.
Find out more: Buying and selling a house – our all-inclusive guide
Find the best mortgage deal
Which? executive director Richard Lloyd said: ‘This is good news for thousands of consumers who supported our call for an end to the confusion about the full cost of taking out a mortgage.
‘Which? has been working with the CML to simplify the wide range of complicated fees and charges in the market so people don’t pay over the odds on their loan. We look forward to all mortgage providers making these changes so that people can get the best deals more easily.’
More than 46,000 people signed up to support our campaign to put an end to fees across the financial sector that are hidden, excessive or make the total cost difficult to understand. Add your support to our sneaky fees and charges campaign.
- Which? Mortgage Advisers – independent advisers can help you find the right deal
- How to get the best mortgage deal – find the best deal for you
- Mortgage fees – our guide to fees you may pay when taking out a mortgage
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