Younger buyers value advice – but may be paying over the odds
Younger borrowers and first-time buyers are increasingly alive to the importance of mortgage advice, recognising that they are dealing with a complex, unfamiliar transaction where expert guidance can make a real difference to outcomes.
However, David Hollingworth, associate director at L&C Mortgages, believes that same appetite for support is also leaving many in this group far more exposed to percentage-based broker fees and pressure to use an estate agent’s preferred adviser.
“There’s a wide range of different broker models of course and borrowers will make up their own minds as to what they prefer,” he told Mortgage Introducer. “But there was a clear connection in the proportion of younger borrowers that were being charged a fee.”
More experienced buyers, who may have been through the process several times, tend to be more confident in shopping around and questioning how advice is priced. By contrast, Hollingworth suggests that less seasoned purchasers are more inclined to accept the first option presented to them – often the estate agent’s recommended broker – without realising they could choose another adviser or another fee structure.
Estate agent recommendations and a transparency gap
That dynamic, he argues, risks hardening into a broader transparency problem in the market.
“Younger borrowers may simply go with the option put in front of them,” he said. “Some may choose to pay, but the big difference suggests that there may also be a lack of awareness of the options.”
Hollingworth points to the overlap between higher fee incidence and the proportion of younger customers who say they felt pushed towards an estate agent’s chosen broker. “That perhaps tallies with the fact that a much bigger proportion felt pressured to use a broker recommended by their estate agent,” he noted.
For intermediaries and distributors, this raises uncomfortable questions. If those least familiar with mortgages are the ones most likely to be steered towards percentage-based or higher charges, it becomes harder to argue that the current landscape is delivering genuinely informed, fair choices.
Balancing commercial reality with fairness for first-time buyers
Hollingworth is clear that it is not for L&C to dictate how other firms set their pricing. “It’s clearly for brokers to decide what the best model is for them,” he said. “But from our point of view we remain committed to not charging a broker fee. We think that only helps more borrowers access advice and often those that need it the most.”
L&C says this approach is not simply a marketing line; it has a measurable financial impact. The firm calculated that it saved its customers more than £33m in broker fees last year compared with what they would have paid under a typical charged model.
For Hollingworth, that underscores the stakes for those coming to the market for the first time. Many first-time buyers are already stretching to assemble a deposit and cover moving and legal costs against a backdrop of elevated living expenses. Any additional hundreds or even thousands of pounds in advice fees can either erode deposit contributions or add to the overall cost of homeownership.
“The crucial element is that borrowers do seek advice,” he stressed. “But they also need to make informed choices on the right type of model that will work for them.”
What best practice should look like
So what does good practice around fees look like, particularly for younger and first-time buyers? While models will differ, Hollingworth suggested a few consistent principles:
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Absolute clarity on charging structures: Customers should be given a straightforward explanation of whether the broker charges a flat fee, a percentage of the loan, or no fee at all – and what that means in pounds and pence for their specific case.
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Genuine choice, not soft compulsion: Where an estate agent has a preferred broker, that relationship should be disclosed clearly and framed as an option, not a requirement. Borrowers must understand that they are free to use any adviser they choose.
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Proactive signposting of alternatives: Given that many younger borrowers may not realise fee-free models exist, brokers and other market participants can help by encouraging comparison and explaining how different fee approaches affect total costs.
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Fairness in the context of vulnerability: First-time buyers, often with little prior experience and tight budgets, warrant particular care. Even where a firm decides that a fee is justified, considering whether the structure is proportionate for this group is key to maintaining trust.
Raising standards across the market
Hollingworth is keen not to portray brokers as the villains of the piece. He emphasises the pivotal role advisers play in ensuring borrowers secure suitable products in a landscape of shifting criteria, rate volatility and complex affordability assessments.
But he is equally clear that the sector cannot ignore the patterns emerging among younger borrowers. If the customers who most need advice are also those most likely to feel pressured into using a particular broker and paying the highest, least transparent fees, the industry risks undermining its own value proposition.
“The message we want to get across is that advice and cost don’t have to be in conflict,” he said. “Good-quality, whole-of-market guidance can and should be accessible without adding unnecessary financial strain at what is often one of the most stressful points in someone’s financial life.”
