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February 2021 | Conveyancing

Addressing remortgage fears

Karen Rodrigues is sales director at eConveyancer

We are just a few weeks into the new year, and many people will start to feel their motivation to keep up with resolutions slipping. For some, 2021 will be the year they want to get their finances into more robust shape, and yet it appears that one of the biggest opportunities for doing so is being overlooked.

The mortgage bill is the largest expense that most homeowners face each month, so you would think that those who want to cut their outgoings would start there. However, it’s striking that so many are apparently unaware of the savings they could make when they reach the end of their initial fixed or variable period.

A new study by TSB found that an extraordinary 89% hadn’t considered remortgaging as a money-saving option, even though the same study suggests that those on standard variable rates (SVR) could save an average of £2,000 a year from doing so.

It’s not exactly small change – that money could be the difference between borrowers keeping their head afloat or languishing in an overdraft all year.

But it’s the reasons why so few borrowers are thinking about remortgaging that should interest brokers the most. One in four say they would find the process stressful, while 16% are concerned about hidden fees. A whopping 51% reckon that they are actually happy with their existing rate, even though many of them don’t know what that rate is.

There is a huge opportunity for brokers here. The reality is that an awful lot of these borrowers will be in a stickier financial position than a year ago thanks to the ongoing economic effects of the pandemic, and they could really use the expertise of a broker to help them find a new deal that will lighten their financial load.

Some of these borrowers won’t have used a broker before, so they need to understand just what a difference an adviser can make. If you aren’t the one highlighting those selling points, then someone else likely will.

There will also be your existing client bank. Are you making the most out of those relationships that you’ve already started? You have a headstart in that you already know when their deals are maturing, providing you with the perfect opening for a conversation about a remortgage.

After all, if you don’t start that discussion with your client, then the lender will. The latest stats from the Bank of England’s Credit Conditions Survey show that lenders expect demand for remortgages to increase in this quarter.

There is no shortage of borrowers coming to the end of fixed rates this year, who could use the assistance of a broker in choosing their next product. If they don’t hear from you, then they may opt for the path of least resistance and go for a product transfer themselves, potentially costing them money in the process.

There is clearly a need for education, too. The benefits of remortgaging need to be made clear – and some of the myths need to be dispelled as well.

As brokers know only too well, a remortgage doesn’t actually have to be a stressful, lengthy process.

One of the reasons we launched Rapid Remortgage last year was to cut out some of the barriers that can hold up remortgage cases, and ensure that they get over the line at speeds not dissimilar to those of product transfers.

Rapid Remortgage is available on cases which make use of our DigitalMove proposition, with a starter pack dispatched as soon as it’s clear that the borrower qualifies. Borrowers can get confirmation from our partner solicitors that they are completion-ready by the end of the working day after that pack is returned, meaning that within just a few days they are off that pricey SVR and onto a more affordable mortgage.

These regular conversations are the key to a lifelong relationship with your clients, ensuring that they keep coming back to you with all of their financial needs, not just those related to home loans. Do they have protection in place to help cover those mortgage payments should they fall ill and be unable to work? Do they have life insurance to pay off the mortgage so that their loved ones aren’t left in the lurch?

There is a lot of attention on the purchase market at the moment, and understandably so given how close we are to the end of the stamp duty holiday, and the ongoing calls for it to be extended.

Ensuring that the relationships with your clients stretch beyond that initial purchase will put your business on a solid footing for the future.