This pulled from a broker forum, tells the experience a seasoned Mortgage Broker had when trying to deal with a lender through their Direct Channel (i.e. rather than via the intermediary/broker route) for his own remortgage….(not me by the way!)
This summer my mortgage rate is up for review.
I’ve been a faithful customer of my current lender ever since I bought my first house in 2002 and I’ve always thought it funny that despite me advocating that my customers change lender every 2, 3 or 5 years, I’ve stayed put.
To their credit, my existing lender has always offered me there-or-thereabouts the best rates on the market, and I’ve only moved house once during that period.
However, at some point I need to bite the bullet and get my two loans (loan 1 for the first purchase and a top-up for the move) in sync and this time round there are better rates in the market, so I decided I wouldn’t do my own remortgage but I’d give the direct channel a test to see what I am up against.
I chose my own bank to do this and tried out their new ‘online remortgage’ system, not too dissimilar to the one I use regularly on the intermediary side. I completed all my details, passed the agreement in principle (natch) and received my welcome email. I uploaded all my information to the online forms (including an accountants reference that I had to download from the intermediary site) and waited for the next steps.
I received emails and texts to say all my documents had been approved and a mortgage phone appointment, that would take around one and a half hours with a mortgage adviser, was booked in.
The day of the mortgage appointment arrived. I gathered all my bank statements and mortgage information together for the impending interrogation and took a call from a polite, robotic sounding lady who took me through their advice process. It struck me as very similar to my own, all the same ‘future plans’ questions were asked, my mortgage preferences were discussed and assessed, all good so far.
However, we got a stuck when it came to the new mortgage term. My adviser asked me what I wanted my budget to be for the new mortgage. I told them I wanted to keep the same term as the existing one and see what the monthly payments on the rates we’d agreed previously looked like. Not possible apparently, ‘we can only work to your budget and your budget as far as we’re concerned is x and this will give you a term of 22 years and 4 months’. OK, well you’re the adviser I thought, let’s go with that I can afford it and I can’t be bothered arguing.
Next came the catch-22 about the redemption of my existing mortgage. The adviser told me that their product had to complete by the latest at the end of July. My current mortgage had a small redemption penalty until the end of July, so something would have to give. No budging from the new lender. She said she said it would be best advice for me to wait until the redemption penalties had expired. I explained to her that waiting three months on the standard variable rate after loan 1’s rate had ended would outweigh the small penalty, but she was unwavering. I had to reject her advice and tell her to make the intended completion date the end of April, when loan part 1’s rate expired.
After an hour and a half of further verbal jousting (we hadn’t even discussed insurances by this point) my adviser told me that we would have a short break whilst she went through my fact find and completed the final checks. We agreed a call-back time.
The call-back arrived promptly and we completed data protection for the umpteenth time. My adviser then said ‘sir, I’m afraid to say that we can’t proceed with your remortgage at this time’.
Flabbergasted, I asked why? She said ‘see when we were going through all your future plans, you told us that you might want to move house in the next 2-3 years. Well we are concerned that we might not be able to lend on that property you might move to, and we’d class 2-3 years as short term lending, so we won’t be able to offer you a mortgage’. ‘I said I might move, anything could happen between now and then, what if I’d have told you that I would be reviewing my rate when it ends and if you’re not competitive I will switch to another lender?’ She said ‘all I can say is that we don’t do short term lending so we won’t proceed’. I kindly thanked her for wasting our time and ended the call.
A cautionary tale of dealing direct if ever there was one. You hear horror stories from time-to-time but until you try and do it yourself you don’t know how bad it is. I’ll be using my little example with every client from now on, as when I was going through the fact-find the thought never crossed my mind that the lender and their adviser would be so unsupportive of a potential future need of mine.
As advisers we will regularly deal with customers who tell us that they may want to move and that will never present us with a short-term-lending worry, just a need to recommend a mortgage that will be able to cope with the possibility.
I feel is a great example of why advice and lending don’t mix, as the lender’s adviser will always put the interests of the bank first and their customer’s need second.
Indeed it is a good example of how dealing directly with many banks and buildings societies is much harder than the clients think. In fairness why shouldn’t your bank, who maybe you’ve been with for many years, offer the easiest and most cost effective route?
Theoretically it may do, but in reality there is far more to think about than just the rate.
The process can be fraught with aspects that customers dont comprehend (because they dont know how regulations and the lenders’ internal criteria and rules work and affect how they process applications). Even the easiest of transactions can be subject to some nonsensical decisions, it isn’t just those situations where the clients have harder to prove income or in need of some aspect that doesn’t fit the norm.
And as far as ‘there or thereabouts on rate’ why would you want something that isn’t the best you could get? Any savings made could be used to reduce the mortgage term, repay other credit or just treat the family!