As an industry, there is little question that mortgage brokers deliver excellent value for money. There’s good reason that the majority of mortgage borrowers make use of independent advice when arranging a home loan and are more than happy to pay for that guidance.
They realise that by doing so, they are tapping into expertise, benefitting from professionals who can guide them through an occasionally challenging process, not simply identifying a cheap deal but also the lenders most likely to look positively upon an application. The fact that there are some lenders who solely offer their products through brokers only adds to their credibility.
It wasn’t always like this, however. Not that long ago, plenty of mortgage brokers felt somewhat uncomfortable about charging a fair fee for their services, questioning whether their clients would feel willing to pay. Yet by demonstrating the value offered, by confidently making the case for the benefit of advice, it became clear that borrowers are only too happy to pay for that service.
However there are other areas of the process where a focus on free is doing clients a disservice.
The cheap conveyancing option
We know that many brokers find it hard to sell against the free legals that may be on offer to their clients when remortgaging.
This is understandable. Remortgaging is not necessarily a cheap process, particularly at the moment when we see lenders racing to pull products and reprice them higher. Speculation around base rate rises hitting 6% next year has led to extraordinary scenes in the market, with thousands of deals pulled within a matter of days. The rates on offer from those repriced deals are substantially higher.
Given the rising costs on everything from petrol to pet food faced by households across the country, that puts finances under far sharper strain.
Borrowers are already looking for savings where they can, and if they are offered the chance of securing the legals needed for their remortgage without having to pay to do so, then why wouldn’t they?
You get what you pay for
Unfortunately, as brokers know only too well, these free legals do actually come at a cost.
First and foremost, the legal firms providing them have to take on masses of cases in order for the business model to work, which inevitably results in a lengthy, protracted process. They simply do not have the staff numbers necessary to handle cases in a timely fashion, leaving clients frustrated as what could and should be a swift remortgage drags on.
These delays only become more pronounced for cases where there are elements somewhat out of the ordinary – a client with a complex income set up, or an unusual property. The legal firms may lack the expertise and experience necessary to avoid these potential hiccups developing into something more serious.
What’s more, only a very basic level of service is provided. If there are any additional requirements – a lease that needs to be reviewed, for example – then there will be a further cost to account for too, undermining the supposed money-saving benefits of going down the free legal route.
Working with professionals
Brokers understand the value of their own service, and thankfully now have the confidence to charge a fair fee for what they provide.
This should put them in a better position when it comes to accentuating the benefits of using a professional conveyancing firm for the remortgage case, even if that does involve an additional fee. Working with the right panel manager means that you can find a conveyancer for your client who has the necessary experience and capacity to handle the case properly, and fit within their budget to boot.
The legal side of any property deal, whether it’s a purchase or a remortgage, is vital to get right. Yes, a fee may be involved, but if that means the client enjoys a quality and swift service, then it will be money well spent.
Karen Rodrigues is sales director at eConveyancer
