Recent research from Pexa suggested that many borrowers believe the remortgage process is not fit for purpose, with as many as one in five abandoning remortgaging due to delays or other frustrations.
Brokers told Mortgage Solutions that clients are often ignorant about what a remortgage involves, assuming that switching lenders is simple, and blamed legal firms for making the process more stressful than necessary.
Can I not just move lenders?
Jane King, mortgage and equity release adviser at Ash-Ridge Private Finance, said that lender admin has been “appalling” for the last couple of years, often because of staff working from home, and said that “if advisers are tearing their hair out then goodness knows how a borrower going direct must be coping”.
King added that it’s a common misconception among borrowers that remortgages simply means swapping lenders, without having to navigate a whole application and legal process. As a result, she said it’s not a great surprise that many simply abandon the attempt and just switch to a new rate with their existing lender.
This was echoed by Lewis Shaw, founder and mortgage expert at Shaw Financial Services, who suggested that many borrowers simply don’t understand the remortgage process in any meaningful way.
He added: “People forget that just because they have a mortgage with lender X, it doesn’t follow that lender Y should automatically accept them without any checks.”
“If you don’t want to abide by a lender’s process, don’t remortgage; stick with a product transfer and avoid the hassle. However, you’ll likely pay more in interest.”
Imran Hussain, director at Harmony Financial Services, agreed, noting that the vast majority of borrowers don’t actually understand what’s involved.
“It’s not as easy as moving from one lender to another.”
Stop making excuses
According to King, too many lenders are still pointing to the pandemic as an explanation for issues with their remortgage service.
She explained: “I think lender staff and conveyancers need to get back to the office as soon as possible and stop blaming covid for their inefficiencies as it’s wearing a bit thin.”
Stuart Gregory, managing director of Lentune Mortgage Consultancy, said that the big issues with remortgages tended to be inconsistency between lenders on the turnaround times for assessing documents, as well as the legal process.
He added: “In addition, some clients can choose to start the process too late, expecting all elements to be in place within a four week timescale.”
Cleaning up conveyancing
A common complaint among mortgage brokers centred on the legal side.
Shaw argued that the conveyancing process is often the main point of frustration for brokers and customers alike when it comes to remortgaging.
He said: “Unfortunately, far too many people opt for ‘free legals’, which in the main are terrible and then complain about them when it’s not going as quickly and smoothly as they think. If we could speed up and make the legal process more efficient, that would have the biggest bang for the buck without a shadow of a doubt and most frustrations would vanish overnight.”
Rob Gill, managing director of Altura Finance, agreed that the legal process often posed a significant problem for remortgage customers.
He described it as “archaic, cumbersome and often impossibly slow, especially when ‘free legals’ are used,” adding: “As I often tell clients, if you opt for free legals you get what you pay for.”
A similar point was made by Jamie Thompson, mortgage broker at Jamie Thompson Mortgages, who emphasised that clients should avoid free legals where possible.
“That’s where hold ups happen and with the massive firms the lenders appoint it can be like getting blood from a stone to get an update. Appoint your local conveyancer or one that comes highly recommended and nine times out of ten it will be a walk in the park,” he continued.
Do more to share data
Robert Payne, director of Langley House Mortgages, said that automated valuations and income verification for stable incomes had been a significant improvement, though argued there were other ways to streamline the remortgage process.
He continued: “We can’t get away from the fact that lenders need to complete a fair amount of due diligence before they depart with hundreds of thousands of pounds but more can be done to make existing data more easily available and accessible so that borrowers, brokers and solicitors don’t have to generate new information for every transaction that takes place.”
Working together
Martin Stewart, director of London Money, said that it was true that the remortgage system was “clunky”, with the potential to be made more efficient.
He continued: “Until all those involved in our sector get around a table, shelve their own vested interests and start to understand that they are all sides of the same coin then we will continue to suffer a challenging mortgage environment. But I live in hope as I daresay there will be another Housing Minister along this week to fix it all.”
