The company called for a mandatory “Four Months’ Notice Pledge” while those in the industry insisted enough was already being done to notify customers that their contract was coming to an end.
So this week Mortgage Solutions is asking brokers: How do you determine when the right time to initiate deal-end communication is and what advice or products do you offer?
I was surprised to see Habito suggesting lenders were not proactively contacting their clients before the end of their deal.
Since becoming a broker six years ago I have not encountered a single client on a residential or buy–to–let (BTL) mortgage who has not received a notification that their rate would be changing soon.
The question of whether lenders are doing this soon enough is harder to answer as we deal with so many different institutions, but I think it would certainly be fair to say that the big lenders are very hot on this, with many getting in touch six months in advance and some even offering clients the opportunity to swap early if it means they will be on a lower interest rate.
The main area of concern for me, is whether clients are fully aware that by going direct to the lender they will not be receiving any advice. While some of the more sophisticated clients will, I think there will be a large percentage of clients who don’t know all the terms and conditions.
We normally look to contact clients around seven months in advance of their rate expiry. This is because most lenders have offers that are valid for six months and most of our clients like to have the comfort of securing a new product early.
We will contact clients weekly until we speak to them. Although most like to lock in a new rate early, there are some who will wait until the last minute.
Typically, homeowners should be reviewing their mortgage three to six months before the end of its initial period to see if it’s the right time to switch. But, with 41 per cent of borrowers finding the mortgage process stressful, it’s no surprise that so many shy away when it comes to remortgaging.
People might feel as though they don’t have the time to look into switching, or that it’s too much hassle, even if it could save them money. It’s important that brokers communicate with their customers throughout their mortgage journey in a way that suits them.
They should also be leveraging technology to speed up the process and remove pain points for customers.
We’ve introduced a free mortgage monitoring service that continuously compares any mortgage with 12,000 deals on the market. We then alert the customer as soon as it makes sense for them to switch, taking into account any early repayment charges if we recommend they switch early.
We’re also campaigning for the Mortgage Switch Guarantee: a new set of principles for the industry to adhere to. This would require lenders to commit to contacting borrowers three months before their initial rate period ends, showing them key mortgage information online or via SMS messages, and displaying the true cost of a mortgage’s initial rate period.
This will offer consumers greater protection, awareness and understanding when it comes to their mortgage, preventing them from paying more than they should.
We start contacting customers eight months before their deal is due to come to an end. In our opinion it’s too late to start contacting customers four months before their deal ends as every circumstance is different.
If a customer wants to raise additional capital for home improvements or building work, they will need some time to work through how much they need to raise.
We have designed our strategy around specific personal circumstances. We don’t differ the strategy based on the length of the mortgage, but the date of communication is relative to the initial fixed term.
We will contact customers up until their deal expires. Our technology also allows us to serve a product transfer option to them which we are able to complete in hours with some lenders, not weeks or months.
We don’t want to bombard our customers with too much information. Our communication strategy is sophisticated and allows us to determine engagement, which allows us to define the next best action.
Customers are also able to book an appointment with their adviser at any point in the journey.
What we recommend will be based on what the customer wants to achieve. We are easily able to provide our customers with a like for like remortgage quote along with a product transfer option for them to compare side by side.
We can also review the protection needs for a customer looking to increase their borrowing and ensure that their home insurance is still sufficient.