Broker raps lenders on mortgage payment protection insurance premiums
MONEY MARKETING - 28TH OCTOBER 2002
Mortgage borrowers are being ripped off by banks and building societies over mortgage payment protection insurance, claims a report by mortgage payment protection insurance specialist Burgesses.
The report reveals many borrowers are paying over the top prices for mortgage payment protection insurance because they take out insurance through their lender.
It claims borrowers are charged up to 37 per cent more for mortgage payment protection insurance bought via banks or building societies than through the broker market.
The survey was carried out by analysing the policies of nearly 40 lenders and brokers. It follows the introduction of basic standards for mortgage payment protection insurance policies by the Council of Mortgage Lenders and the ABI which took effect on 1st July.
Burgesses says IFAs could exploit the situation by switching borrowers’ insurance away from their bank or building society, saving them more than £1,500 during the lifetime of their mortgage. It says the average cost per £100 worth of cover from a building society or bank was found to be £5.95 compared with £4.95 for the average product available through the broker market.
Burgesses says the cost of providing cost for a monthly mortgage repayment of £500 would be £5 a month more through a bank or building society, which works out at £60 a year or £1,500 over 25 years.
Managing partner Simon Burgess says: “The survey reveals the scandalous truth that banks and building societies are creaming the public for every penny they can get.”
British Insurance Brokers’ Association chief executive Mike Williams says: “IFAs can provide policies that are better in price, cover and service than the lenders.”
