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TMW’s six-week product transfer window raises broker concerns

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  • 10/08/2017
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TMW’s six-week product transfer window raises broker concerns
Brokers have raised concerns that The Mortgage Works is not allowing them enough time to properly address their clients’ needs when a deal is nearing its maturity.

The buy-to-let lender, which is part of the Nationwide Building Society, only allows a product transfer to be completed within six weeks of the deal end.

TMW’s stance was confirmed when it released details of its retention proc fee last month.

In contrast, most lenders across the market allow product transfers up to three months before the deal expires.

TMW’s stance has prompted fears that brokers will be unable to complete a full market review in the time allowed or that delays in the process could result in borrowers slipping onto more expensive standard variable rates.

 

Uncompetitive

New Leaf Distribution mortgage and protection adviser John Azopardi said the typical three- to four-month window was necessary to allow sufficient time to arrange a remortgage to a new lender if the current lender’s products were uncompetitive.

“By restricting broker access to transfer or switch products until six weeks before the current product ends it will inevitably lead to several problems,” he said.

“If a remortgage cannot be arranged in time, the borrower will spend some time on The Mortgage Works standard rate when they fall off their existing product – essentially an additional form of penalty.

“And inertia and the fear of not getting a deal with another lender in time may mean that borrowers accept inferior products from The Mortgage Works rather than the appropriate rate for the lender’s risk.”

He added that it also gave a bigger window for lenders to approach borrowers directly and exclude the broker.

 

Review entire market

John Charcol head of specialist lending Paul Elliott (pictured) echoed Azopardi’s concerns that the six-week limit made it harder for brokers to do their job.

“An adviser should review the entire market in conjunction with product transfers on offer from the current lender before making a recommendation,” he said.

“Given that six weeks is a short window for a move to a new lender, it means an adviser must make the call on whether to recommend that the client move to a new provider based on the product transfer rates available at the time of their market review which would normally be 10 – 12 weeks before the current end date.

“This in turn means the adviser cannot guarantee that the rate they are looking at will actually be available when the client makes an application for their product transfer.

“The rate could be higher which could change the recommendation, or the rate could be lower which could again mean that the client should have stayed with their lender instead of moving elsewhere,” he added.

However, Elliott added that if the client was not interested in or for some reason could not look elsewhere, then six weeks would be enough time to complete a straight swap.

 

Delays in process

Likewise, Buy to Let Club managing director Ying Tan was less perturbed but agreed problems could arise should there be delays in the process.

“Of course longer than six weeks would be nice and preferable, however our consultants have found six weeks to be plenty of time given how quick product transfers can take,” he told Mortgage Solutions.

“A challenge may arise if there were any down valuations from the automated valuation model for instance, however so far we have not seen any evidence of this.

“A good consultant should be all over their renewals during this period when purchase volumes are low,” he added.

Nationwide declined to comment.

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