Here we go; if you don’t evidence that you have considered a second charge or secured loan when you are working with a client who is asking you to arrange a remortgage, the UK’s claims management firms will have you in their sights.
So this is how it works (and this is really obvious). Clients take out a mortgage between 2002 to 2007 and the chances are they have a cheap reversionary rate after the product selected has finished because the lenders never factored in that the rates would stay at 0.5% for 5 years plus.
Assuming that they aren’t immoral and have retrospectively changed these terms, brokers will be fully aware that these clients are not motivated to go anywhere right now. That said, if rates do increase in the next 12 months clients are likely to consider remortgages and use this opportunity to ‘clean up’ their household finances and borrow more.
Sadly, a significant chunk of clients won’t seek decent independent mortgage advice with an intermediary and lenders will use this as a ‘once in a generation’ chance to get these clients off these rates, which bluntly, make them next to no money.
It is highly possible that by keeping these clients on these lower rates and taking extra funds on a second charge, the ‘blended’ cost is going to be cheaper.
Simple isn’t it? If you don’t do this, it could at best, and will at worst, be argued that you haven’t considered the clients’ circumstances correctly and as a result you have failed in your ‘duty of care’ as you lost them the savings of their lower rate when there was a better and cheaper opportunity available.
Rob Jupp is chief executive officer of Brightstar Financial
