Brokers have highlighted incorrect content around interest-only mortgages on comparison website Compare The Market.
In response to the headline: “Should I overpay if I have an interest-only mortgage?” – the website recommended: “You’ll have to weigh up overpaying an interest only mortgage very carefully as it has few advantages.”
The text went on to say: “With an interest-only mortgage any overpayments won’t be paying off the capital like it would with a repayment mortgage – this has to be paid in one go at the end of the term.
“So, you won’t be reducing the amount owed, which means your overpayments will have little effect.
“Instead, you might want to consider boosting whatever savings or investments you’ve chosen to meet your capital payment at the end.”
The content was identified by Steven Morris, director at Bristol-based independent mortgage broker Advantage Financial Solutions, who shared his thoughts on LinkedIn and explained why the copy is incorrect to Newspage.
He said: “This is just factually incorrect. Interest-only mortgages are as they sound, where only the interest for borrowing the money is charged.
“This interest is paid using the monthly direct debit. Therefore, any additional payments can only come off of the mortgage balance owing.
“Where else could the money possibly go?
“If you overpay and, say, halve your mortgage balance, you are then being charged interest on a balance half the size, resulting in half the payment.
“In the words of a certain famous meerkat, simples.”
Luke Thompson, director at PAB Wealth Management, said the Compare The Market content could prove extremely costly to consumers: “This is why you need a mortgage adviser and shouldn’t just try to do everything yourself by using these websites.
“You wouldn’t take your car to be fixed by a plumber. Conversely using a website which is offering generic advice which doesn’t necessarily fit your needs could end up costing you money.
“But let’s deal with the information contained in this post.
“Put bluntly it’s wrong but a layman on the street will potentially take this as gospel as it is posted on a big website that should have quality control measures in place.
“If someone with an interest-only mortgage took this ‘advice’ at face value it could end up costing them thousands of pounds.”
Craig Fish, director at London-based broker Lodestone Mortgages & Protection, said: “How is it even possible that such vastly incorrect information can be shared on one of the UK’s largest consumer reference sites?
“The ‘expert’ responsible for those comments should have their adviser license removed, that is if they even have one.
“The FCA needs to clamp down on this quickly because many thousands of UK consumers, unfortunately, look to these places for information and advice, and to be fed such false information is a punishable offence.”
However, Stephen Perkins, managing director at Yellow Brick Mortgages, said: “I am not surprised by this, given such websites are using experts who are largely unqualified to give advice and therefore giving incorrect information.
“How these large companies sign off such financial promotion and content given the approval processes brokers have to go through is baffling.
“The FCA needs to ensure that advice given on large platforms such as these is compliant and accurate, especially given the influence they have.
“The lesson here is to get real qualified experts to write your content.”
Michelle Lawson, director at Lawson Financial, described the issue as “disgraceful at best.”
She continued: “For a huge and ‘trusted’ consumer platform such as this to have such inaccurate information is frightening and highlights further the need for advice rather than information.
“Various industry commentators champion these sites, but are they checking who they champion?
“Hopefully action will be taken to ensure this is corrected and communicated, however it is impossible to tell how many people will have taken onboard this error.”
Meanwhile Bob Singh, founder at Chess Mortgages, said someone in compliance at Compare The Market must have been asleep at the wheel: “This is quite frankly laughable. The public read and believe these websites and this one takes the biscuit.
“Clearly someone in compliance and financial promotions has been sleeping at the wheel. I’m sure it will be corrected the moment it’s brought to their attention.”
Rohit Kohli, operations director at The Mortgage Stop, was also flabbergasted that this got through compliance.
He said: “How did this get through any sort of due diligence or compliance checks?
“It smacks of someone using some sort of AI to create some content and then just throwing it out there.
“If this had been from a smaller firm I can almost guarantee there would be consequences. As it’s one of the big players, we know nothing will happen.”
Ross McMillan, owner at Glasgow-based broker, Blue Fish Mortgage Solutions, was worried about the impact on consumers: “What makes this misinformation so startling and scary, is that sites such as these are considered a reliable source for a huge swathe of the general public.
“Even though they are, in fact, largely simply affiliate-based corporate machines, the status of sites such as these with the general public means it’s frankly a disgrace that they haven’t had the responsibility to do a basic sense check of their content.
“Perhaps it’s time for them now to consider featuring a “What our guy down the pub says” instead, as based on the evidence of this article, they may actually get more sense.”
A spokesperson for Compare the Market said: “We are committed to providing clear and helpful information to households.
“The content has been removed from our website and we are thoroughly reviewing all associated content.
“Price comparison websites give people a range of options to consider when they are making financial decisions.
“We recognise that mortgages are complex financial products, and it’s important for people to take time to consider the choices available to them.
“Consequently, we always offer customers the option to take advice that is tailored to their individual circumstances, partnering with the UK’s largest fee-free mortgage adviser London & Country Mortgages Ltd (L&C), to provide our customers with advice from across the market.”
