New Call for Mandatory Mortgage Advice for First Time Buyers: What It Means for You

A new industry report has sparked debate about whether all first‑time buyers should be required to receive regulated mortgage advice before taking out a home loan. The proposal has been backed by major mortgage bodies and comes at a time when the FCA is reshaping how advice and execution‑only mortgages work.

Here’s what’s happening — and why it matters if you’re buying your first home.

What’s the issue?

Paradigm Mortgage Services has published a paper arguing that first‑time buyers face higher risks when choosing a mortgage without professional advice. They say the current system allows too many people to go “execution‑only” — meaning choosing a mortgage without any regulated guidance.

The Association of Mortgage Intermediaries (AMI) has publicly supported the proposal.

Why are first‑time buyers considered more vulnerable?

According to the report, first‑time buyers often face challenges such as:

• Little experience with long‑term financial products
• Lower financial resilience
• High emotional pressure during the home‑buying process
• Difficulty comparing complex mortgage options
• Not knowing what lenders look for or how future borrowing could be affected

The concern is that without advice, many first‑time buyers may unknowingly choose unsuitable products or misunderstand affordability risks — especially in a changing interest rate environment.

What about protection insurance?

The FCA’s recent research found:

• 58% of UK adults have no protection insurance
• 72% of protection needs are unmet

Paradigm argues that the home‑buying process is one of the most important moments to consider protection (life cover, income protection, etc.). But execution‑only routes mean many first‑time buyers never have this conversation at all.

What harms are they trying to prevent?

The report highlights several risks if advice isn’t mandatory:

• Picking the wrong type of mortgage
• Misjudging affordability
• Missing lender criteria that could affect future borrowing
• Not reviewing protection needs
• Making long‑term decisions without understanding the consequences

They compare this to past pension mis‑selling issues, where mandatory advice was eventually introduced to protect consumers.

Why now?

Recent FCA changes removed the long‑standing “advice trigger” — a rule that previously nudged consumers toward advice. At the same time, execution‑only pathways have expanded.

Industry leaders say this combination creates a “regulatory inflection point” where extra safeguards may now be needed.

What industry leaders are saying

Our View

• All first time buyers should have an educational, financial guidance session, we do not believe full, regulated advice that may have significant costs when it hard enough to save a deposit in the first place is required.
• Part of the guidance session should include afforadbility checks, shock event affordability tests including rate rises and job loss, insurance and protection needs.

Association of Mortgage Intermediaries (AMI)

• “Advice is essential for first‑time buyers.”
• “It supports Consumer Duty and helps build long‑term financial resilience.”

What this means for you

Nothing has changed yet — this is a proposal, not a rule.
But the direction of travel is clear:

• The industry increasingly believes first‑time buyers benefit from advice
• Regulators are reviewing how consumers choose mortgages
• There is growing focus on vulnerability, protection gaps, and good outcomes

If you’re buying your first home, getting regulated advice remains the safest and most reliable way to ensure your mortgage is suitable and affordable for the long term.