In previous years, many people have been trapped in mortgage deals they couldn’t seem to get out of. It is therefore no surprise that the news regarding a seven-day switching plan has got people talking. The new one week standard for those looking to move to a better deal is designed to make life easier for consumers and, anything that can be done to make these mortgage prisoners move to a better rate quicker and easier has to be seen as a positive move.
I have recently completed a standard remortgage which achieved a completion time of three weeks. Therefore, there is absolutely no reason why a straightforward remortgage that is fully packaged on the high street and subject to the valuation being approved can’t be completed inside four weeks.
On the other hand, in specialist cases where there are more unusual circumstances due to income, age, credit history or type of property, more human involvement is required and although a remortgage tends to be easier than a purchase, four weeks is probably unrealistic. Therefore, when comparing specialist lenders to high street lenders, there is a vast difference in terms of timescales because, unlike high street lenders, specialist lenders do not deal with vanilla clients or use a systematic approach. They are about providing a solution that is not widely available and is not about the speed.
The new seven-day switching plan aims to boost competition among lenders and, because they are always looking to get new clients, it’s likely that they will rise to the challenge while offering borrowers a better service as a result. And, because remortgages often have much lower loan-to-values (LTV) and income ratios, customers looking for these loans are usually likely to be a safe bet for lenders to have on their back book.
In my opinion, it is very promising to see that the government is getting more involved and is starting to question why the process can’t be made faster and more convenient for consumers. It will certainly be interesting to see how the new standard will impact the market, particularly if it is implemented as early as next year.