Are you thinking of buying your first property, or already in the process of doing so? Then to say this can be rather stressful is an understatement. 

Stamp duty, legal fees, and paperwork, can prove to be inundating. Shouldn’t getting a mortgage approved be straightforward and easy? In reality, this process is easier said than done. 

Some lenders may try to capitalise on this fact by trying to put pressure on the buyer rather than letting them have their own say in the mortgage process. This practice is known as conditional selling.

What does conditional selling mean?

In simple terms, conditional selling takes place when a mortgage lender, broker, or estate agent tries to link the sale of the property to the purchase of other services, such as mandatory insurance, a mortgage broker, or a valuation service that acts in their favour.

While mortgage and financial services are perfectly legal and provide convenience, it is important to understand where convenience ends and where illegal conditional selling begins.

In the UK financial services industry, conditional selling is monitored by regulatory bodies such as the Financial Conduct Authority (FCA). This especially applies to unacceptable practices that pushes prospective home owners or pressurises them into buying an unwanted service as a prerequisite for getting a mortgage.

What this essentially says, is that it creates a situation where you are told, “Your mortgage deal will come through only if you also buy this specific life insurance policy from us”, or “You won’t be able to view the property without selecting a broker from our company”. These statements are examples of unethical selling practices that are termed as conditional selling.

The difference between required and recommended

When you are a prospective buyer and are ready to begin the mortgage process, you will ideally need to differentiate between the two above mentioned scenarios.

1. Mandatory requirements: These requirements can be legal or contractual. A lender can legally insist on specific, necessary services. For instance, they may insist that you must have an insurance policy in place for the building before completion, in order to ensure that the property is protected from theft, fire, and natural disasters.

To obtain the required insurance cover, you retain the right to carry out any form of research and shop around to choose the most suitable insurer from the open market.

2. Conditional selling or illegal coercion: This occurs when the mortgage offer is made with conditions (recommendations) on you buying an additional product from the lender or a connected third party. Examples include forcing you to buy the lender’s specific home insurance, life insurance, or an income protection policy.

Where conditional selling most often appears

This practice isn’t limited to mortgage lenders themselves. It can occur at any point during the house-buying process.

1. The mortgage broker

While many mortgage brokers are professional and act in your best interest, some may pressure you to use their in-house or preferred insurance provider or conveyancer. They might suggest that using their own providers will speed up the application process or lead to a better acceptance rate. 

If your broker says that using their company/firm is the only way to proceed to get approval for a mortgage, this crosses the line and can be categorized as conditional selling.

2. Estate agents

Estate agents sometimes operate as introducers for mortgage brokers, conveyancers, and insurance firms, receiving referral fees in the process.

The most common form of conditional selling here is similar as seen above. An agent might tell you, “You must use our in-house broker to view the property,” or, “The vendor will only accept an offer if you agree to use our recommended conveyancer.”

While they can certainly recommend these services, they cannot ‘tie’ you down to specific conditions, or to have your offer submitted using a specific service provider. 

3. The lender or bank

In the case of the mortgage lender or bank itself, conditional selling typically involves other products such as insurance. They might offer a slightly lower interest rate, but only if you take out a specific insurance product with them. If the product is not mandatory for the security of the loan, forcing a client to purchase an auxiliary product of this kind is restricted by FCA regulations. This is in order to ensure fair competition and consumer choice.

Your rights as a borrower and how to protect yourself

The most important message from this article is that you have the right to choose as a UK homebuyer.

1. Challenge the condition

If a broker or agent tells you that a specific non-mandatory service is a condition of the deal,

• Ask for it in writing – You can politely request that they put the condition down on paper. If they refuse, you have reason to believe they are engaging in an unethical practice.
• State your right – Tell them that you are happy to provide proof of adequate cover (e.g., buildings insurance) from a provider of your choice, and that the FCA and Estate Agents Act prevents them from forcing or coercing you to go with their specific partners and companies.

2. Document and report

If you feel you have been a victim of conditional selling, especially from an estate agent who refused to submit your offer:

• Estate agents: Report the firm to The Property Ombudsman or Property Redress Scheme (PRS). You can also report to Trading Standards, as they are responsible for enforcing compliance with the Estate Agents Act and its guidelines. 
• Lenders and brokers: If the coercion directly relates to a financial product (mortgage or insurance), report it to the Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS).

Conclusion

While convenience is looked at when going in for a mortgage, this often leads people to accept packaged services. You should remember that you are in control. By staying within the proper guidelines and knowing the pitfalls of conditional selling, you can ensure your journey to securing a home loan remains transparent, fair, and focused. Moreover and importantly, finding the mortgage deal that truly addresses and helps accomplish your goal. 

Disclaimer: The information provided in this blog is intended for general knowledge and informational purposes only, and does not constitute financial advice.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

BVS Mortgages & Financial Services Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.

Approved by The Openwork Partnership on 06/11/2025.

BVS Mortgages & Financial Services Ltd is a broker, not a lender. We work within the mortgage market and may earn a commission from lenders, this amount varies between lenders.

Published on 2025/11/13