Existing Mortgage Lender will not change product direct?

by Readers Question

10:34 AM, 8th August 2016
About 2 years ago

Existing Mortgage Lender will not change product direct?

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Existing Mortgage Lender will not change product direct?

I recently want to change an existing BTL mortgage product. The mortgage in question had completed a fixed term and reverted to the standard rate and I wanted to take advantage of the low fixed rates on offer and fix the mortgage rate for 5 years. not talking

In the past I have always contacted the lender direct and arranged it with minimal cost.

Imagine my surprise to get a recorded message saying that this option wasn’t available direct as I needed to consult an independent mortgage advisor to ensure I got best value.

As the outstanding mortgage is less than £40,000 unless my existing provider has very uncompetitive rates then it will cost me more money to go through an IFA. Even if the IFA recommends staying with the existing lender I still need to pay their fee.

Does anyone know why this change has come in and whether there is a way round it.

Harold



Comments

Neil Patterson

10:39 AM, 8th August 2016
About 2 years ago

Hi Harold,

This is more common than you would think. BMS being one of the largest BTL lenders are a classic example of a lender who will not talk directly to customers.

It is a commercial decision by lenders to not employ, train and regulate staff to advise the public direct. They have assessed that the cost of this would outweigh the benefit of conducting business direct and would prefer the cost and responsibility to be cover by a Broker/IFA.

Howard Reuben CeMap CeRER

12:20 PM, 8th August 2016
About 2 years ago

Hi Harold

Working with a Mortgage Adviser should never be a 'cost' but in fact it should be regarded as an investment to ensure that all mortgage products have been properly researched for you, that your own current and future flexible requirements have been considered and implemented, that best overall value arrangements are set up for you and of course that you have an Adviser who's PI Cover, market knowledge, experience and access to market provides you with peace of mind, accountability and a professional resource that offers in-house much more than just a mortgage service.

Our many Clients work with us repeatedly (some of whom have hundreds of properties each and still buy our professional service every time they either make a purchase or refinance) not because they don't know how to, but because of all of the benefits listed above.

The headline interest rate from an existing lender may appear attractive, but what about their arrangement fees too? Did you know that BTL remortgage products are available with free legals, free valuation and no arrangement fees? These products may have a slightly higher interest rate, but with no other costs at all, they often are calculated as the very best value deals on offer ..... not a lot of people consider the whole picture and fall in to the trap of 'cheap rates' when in fact they are the most expensive deals due to the high arrangement fees.

You ask "whether there is a way round it." - yes, always, work closely with a professional financial adviser. Our contact details can be found via our Business Profile link above.

Hope that helps.
Howard Reuben recently posted...Download document library from H D Consultants - Mortgage & Protection | Buy To Let | Colchester

Whiteskifreak Surrey

14:49 PM, 8th August 2016
About 2 years ago

You might be able to buy a so called 'lifetime service' for one-off fee, especially if you have more than one-two properties. We bought one for £1000 a few years ago and it paid itself off several times, as we were remortgaging, expanding etc..
Have a look around who offers such service - we found it beneficial. And will all the perks listed above.

Colin Dartnell

9:26 AM, 9th August 2016
About 2 years ago

Am I missing something here? Are you saying you will be charged if you ask an IFA to arrange a mortgage. If all you need is a mortgage, brokers should not charge as they get their commission from the lender.

Ask if they will share their commission with you, mine does.

Neil Patterson

9:57 AM, 9th August 2016
About 2 years ago

I don't think many lenders pay brokers for a product switch.

Puzzler

8:54 AM, 14th August 2016
About 2 years ago

May be something to do with the Mortgage Credit Directive which came into force earlier this year?

Colin Dartnell

10:13 AM, 14th August 2016
About 2 years ago

I still don't get the problem. If you mortgage is out of any penalty period and your lenders rates are too high then go on the open market for a mortgage. The broker should not charge you anything, if they do find another one!

Why do you want to go for a mortgage switch with a lender whose not competitive?

H B

5:19 AM, 15th August 2016
About 2 years ago

Your lender has obviously made a commercial decision to not offer remortgages to low balance borrowers. The reasoning is probably that borrowers will probably be put off moving and will pay the BTL SVR out of laziness.

While the bank will lose some clients, it will retain enough at a high margin to allow it to subsidise some of the highly competitive rates on offer today and maintain the higher profitably of BTL.


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