Brokers will now receive a proc fee of 0.40 per cent, up from 0.30 per cent for every product switch booked from 1 March onwards.
This follows the lender’s decision to extend the window in which borrowers reaching buy-to-let mortgage maturity can switch products. This is now six months, up from three.
Moray Hulme (pictured), director of mortgage sales at Paragon, said: “We know that 2022 will see a large number of mortgages reach maturity and at a time of considerable economic uncertainty, a significant number of landlords will seek to switch over to a new, competitively priced product at the earliest opportunity.
“This latest measure is part of our wider work, where we’ve adapted both products and processes, to support these landlords.”
“We recognise that brokers play an important part in this too – the amount of work that goes into placing a product switch can be almost that of placing a new mortgage – so the increased procurement fee is to reflect the value of the intermediary in the process,” he added.
A welcome move
Gindy Mathoon, director at Create Finance said the change was very good and added: “It entices the broker to keep the business with the lender especially with limited company and lending policies being strict. It’s a welcome move by Paragon.
“I’d say it’s a better deal than many lenders as a lot of them don’t offer a proc fee for product transfers. The fact that Paragon will pay a decent proc fee is good news for the broker.”
Ian Balfour, director of sales and marketing at TFC Homeloans, said: “Any increase in proc fee on product transfers is beneficial. A product transfer should be treated as any other mortgage process.”
Jane Simpson, managing director of TBMC, said the increase put Paragon as one of the highest payers in product switches.
“Given remortgage business is likely to be the main source mortgage business for brokers in 2022, it’s good to see a lender making this increase and recognising the work brokers put in.
“Most brokers, like TBMC, will look at both the option of staying with the current lender and remortgaging away. So there is still a lot of work that goes into finding the most suitable option for their customer,” she added.
Simpson continued: “It’s absolutely correct that the proc fees for switches are below that of a new mortgage, given the vastly reduced work at application stage, but hopefully this increase will bridge the gap and ensure that brokers explore product switches with their customers.”
Cat Armstrong, mortgage club director at Dynamo for Intermediaries said there weren’t many specialist lenders who offered retention products but of those who did, the average proc fee tended to be around the 0.30 per cent mark.
She added: “Compared to the prime market, 0.4 per cent is 25 per cent higher than most and 50 per cent higher than some.”
“I praise this move by Paragon as it acknowledges the hard work that is undertaken by brokers. It is not simply a case of filling in a form for a product switch. The majority of brokers will complete a full review of the client’s circumstances and lending options to ensure the very best advice is given. This takes time and brokers deserve to be remunerated for this.”
