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Lenders praised for adopting ‘useful’ longer offer terms to combat ‘terrible’ free legals – analysis

  • 13/06/2019
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Brokers have praised lenders for being more open to longer offer terms, arguing that it can be useful for a range of different clients.


This week Nationwide Building Society announced it was doubling the offer term on remortgage products from 90 days to 180 days.

The lender said it had made the change following feedback from brokers, as well as industry research which suggested that around a third of remortgage applications are reserved more than three months in advance of a borrower’s existing deal coming to an end.

Ian Andrew, the mutual’s intermediary relationships director, explained that the move would enable “ those looking to remortgage a longer time period in which to complete, which is particularly useful for those who wish to access a new mortgage deal at the end of their existing one,” as well as bringing it in line with purchase offers.


Countering iffy legals

Jane King, mortgage and equity release adviser at Ash Ridge Private Finance, said this was a useful facility to have, noting that when she reviews a client’s mortgage she often advises them to allow eight weeks if they want to switch lenders, mainly due to the time it takes to complete the legal work.

She continued: “Bearing in mind some of the free legal firms instructed by lenders, including Nationwide, offer a terrible service, it will at least offer a few months’ comfort if these overrun.”


Start the conversation with clients earlier

Sebastian Riemann, financial consultant at Libra Financial Planning, welcomed Nationwide’s move, noting that other mainstream lenders such as Barclays and NatWest also provide lengthier offer periods.

He said: “It means that you can contact the client sooner, and lock the rate in, allowing you to insure against negative movements in the market. It gives you the chance to speak to them before a lender might.”

He noted that now, with Brexit hanging over the market, it was particularly useful to have longer offer periods to work with.

“With Brexit, if rates change significantly, it gives clients peace of mind. With the way things stand, clients can lock in a rate now and then see what happens with Brexit. If nothing happens, they have the option to go for something different.”

However, Riemann added that longer offer periods present the potential downside of having to do twice the work should a better rate emerge closer to the time with a different lender.


Essential for purchases

Adam Hosker, founder of Bespoke Finance, suggested that it was “rare” that such a long term was needed with remortgages, but said it was great to see Nationwide joining in with what had become a “market trend”.

He added: “It is more important on purchases – especially new build – then remortgages.”

Rachel Lummis, mortgage adviser at Xpress Mortgages, said that six-month offer terms were a must in today’s market as they give much needed flexibility.

She added: “With a purchase it’s a no brainer that all too often three months is not going to be enough. There are several factors that can slow down the process such as the length of the chain, the conveyancing , especially with leasehold properties where the legal process is more lengthy.”


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