Would you still try and get a better deal if the remortgage process was harder?

Questions and concerns about the remortgage process are often our clients’ top priority. And now a leading mortgage expert has warned that the link between consumers and their mortgage lenders is at risk of becoming ‘broken’ thanks to high value mortgage borrowers choosing to regularly switch lenders during the remortgage process. Paul Smee, the director general of the Council of Mortgage Lenders, believes that the upcoming Mortgage Market Review will make the remortgage process more difficult and that more consumers will choose to stick with their lender rather than switching elsewhere.

So, would you move your large mortgage if the process were more difficult? Should borrowers be able to switch their mortgage from lender to lender easily? We consider these questions and more.

Borrowers can expect proactive advice from their broker on the remortgage process

Recent figures show that the number of people going through the remortgage process in the UK rose this summer – up 8.6 per cent between June and July to £3.8 billion. However, Paul Smee from the Council of Mortgage Lenders has warned that borrowers may be forced to consider the ‘merits’ of their existing deal rather than switching lender when new mortgage rules come into effect.

He said: “A drawback of a market where deals can be broked and rebroked with such facility can end up as one where the crucial link relationship between end borrower and lender gets at best obscured and at worst broken.

“Given the regulatory changes coming around the tracks remortgaging will probably prove to be a more cumbersome, and certainly a more intrusive, business for borrowers than it was in the past. That is not necessarily a positive but it will perhaps encourage both borrowers and lenders to weigh up the merits of retaining their existing relationship against severing it in favour of an alternative.”

With most large mortgage deals being arranged on a short term basis – on two, three or five year fixed or tracker rates – it can frequently pay to switch lender for a better deal when your product expires.

Islay Robinson, CEO of London mortgage broker and large mortgage expert Enness Private Clients, said: “Responsible advisors who are looking after their client’s best interests regularly review their mortgage arrangements to ensure they remain appropriate and that they continue to offer the best value.

“A good broker wouldn’t be doing their job properly if they failed to keep in regular contact with a client and recommended the remortgage process if there were good reasons to do so. From that point of view I think that thousands of homeowners will continue to remortgage every month in order to benefit from lower rates, more flexible lending and the ability to raise capital.”

Mr Smee from the Council of Mortgage Lenders also cautioned against focusing on short-term costs over other aspects of a mortgage product. He said: “As the market picks up, we do not want an absence of meaningful lender-borrower relationship to recur as it can lead to an overemphasis on particular aspects of products, especially short-term price at the expense of other features. We should not be a market where price is the only differential.”

Mr Robinson, the London mortgage advisor, said: “For some clients the relationship between them and the lender and the flexibility of the loan arrangements is paramount. However, many other large mortgage borrowers simply want the most competitive terms. Our job as brokers is to make that process as simple as possible and to continue to recommend the most appropriate deal – even if that means going through the remortgage process.”

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