My current mortgage deal ends in the summer. My diligent mortgage broker contacted me around six months before the expiry date. We had a chat and agreed the parameters of the type of deal I was after and all was well with the world. He sent me a lengthy email with all the documentation for me to collate which I duly noted and filed away in the special ‘I’ll get around to that’ file. Inevitably, it took me a little longer than anticipated to compile this list even after a couple of nudges from my broker. Suffice to say I managed to find some much needed urgency after world events gave me the kick up the backside that I needed and thankfully, despite some initial concerns, my lack of speed did not cost me a favourable deal. In fairness, this was more due to the good fortune of having a decent level of equity and a good broker in place, although not every borrower will be so lucky.
Yes, I should know better but, as I’m sure all advisers are fully aware, the required documentation list is long and can be a little over facing – even for someone who has worked in the mortgage world for more years than they’d care to admit. The delay was clearly not my broker’s fault, he can’t force me to get my act together. The big question is – is there an easier way for me to generate this information and for my broker to collate it?
Well, we’re all realising how technology has become the modern-day superhero. From a Zoom conference Friday happy hour with your mates to setting up whole offices of remote workforces, it’s clear that a variety of online solutions, systems and platforms are – if they weren’t already – helping to prop up many businesses and market sectors. But back to the question. The answer is yes and let’s pick out two important elements of how and why this is now possible.
Online credit reports
Believe it or not, the history of our credit reference agency partner Equifax dates back to 1899. In 2002, UK consumers were first offered online access to their credit reports and this is an industry which has become increasingly sophisticated over time. However, the principles remain the same. A credit report is a record of a borrower’s credit history from a number of sources, including banks, credit card companies, collection agencies and governments. A mathematical algorithm is then used to produce a credit score and report. This is then used by lenders to determine an individual’s credit worthiness.
Open banking
Over two years ago, the Competition and Markets Authority (CMA) ordered the nine largest UK current account providers to open up their data and help people improve the way they manage their finances. Open Banking works through legal standards that require UK banks to share – subject to the customers’ approval – their data through application programme interfaces (APIs). These APIs send data from the customer’s bank to approved third parties, who in turn can offer a range of products and services.
Successful integration of these two major tech developments can also help deliver an online solution which empowers consumers, whilst generating and delivering important information to the intermediary market in a timely manner. Efficiency, speed and quality of service is everything in the modern mortgage market. And the ability to pre-qualify applicants at the time of advice and prior to application without a visible credit footprint will enable advisers to same valuable time and energy. Important factors which will allow intermediary firms to get ahead and stay ahead.
David Jones is director of Click2Check