The relationship between borrowers and their mortgage lenders is
at risk of becoming a thing of the past because so many borrowers
regularly re-mortgage in order to get a better deal and cut their
monthly repayments. But re-mortgaging could be set to become more
difficult when new mortgage regulations come into effect so would
consumers choose to remain with their existing lender if the re-mortgage
process was tougher? Indeed, should borrowers be so readily able to
switch from lender to lender in search of a more competitive interest
rate?
Last summer the level of re-mortgaging in the UK rose by 8.6 per cent to £3.8 billion. But according to the Council of Mortgage Lenders borrowers may be obliged to consider the advantages of their existing mortgage rather than switching lender simply for a lower rate in order to maintain a relationship with their lender. And, of course, that relationship is a two way thing so the new rules could also encourage lenders to seek to retain existing customers instead of targeting new business with rates not available to existing customers.
Once the new regulations come into force re-mortgaging is certainly likely to be more difficult than it has been up until now. That is not necessarily a good thing but it will, at least, result in both parties considering the advantages and the importance of retaining an existing relationship.
The other factor to consider is that many mortgage deals are arranged on a short term basis - on two, three or five year fixed or tracker rates so there is a natural point when the deal comes to an end when a borrower might re-consider their options. And, in fact, it is often better at that point to switch to a different lender; an issue that lenders must be aware of but seem to do little to resolve.
A professional mortgage adviser, concerned only with their client's best interests would always suggest regular reviews of mortgage arrangements to ensure they are still offering the best possible value. A borrower's personal situation may change significantly over the course of a mortgage period so this approach to regular reviews makes sense.
Indeed, a professional broker would not be doing their job properly if they failed to review a mortgage at key points within the mortgage term or when a client's circumstances changed.
Obviously, they would only recommend a re-mortgage where it would genuinely put the client in a better financial position. However, many homeowners could benefit from lower interest rates or from releasing capital.
Although any decision to re-mortgage should not be made just on the interest rate alone as there are other aspects to consider with regard to such an important loan as a mortgage; it would be a sorry state of affairs if the only difference between lenders of concern to the borrower was cost. Lenders themselves should be wary of allowing their product offering to reach this point.
A leading London mortgage broker specializing in large mortgages believes that for some clients the relationship with the lender is extremely important as it offers the opportunity for flexible loan arrangements but for other borrowers the most competitive rate is the most important element of a deal.
Source
Last summer the level of re-mortgaging in the UK rose by 8.6 per cent to £3.8 billion. But according to the Council of Mortgage Lenders borrowers may be obliged to consider the advantages of their existing mortgage rather than switching lender simply for a lower rate in order to maintain a relationship with their lender. And, of course, that relationship is a two way thing so the new rules could also encourage lenders to seek to retain existing customers instead of targeting new business with rates not available to existing customers.
Once the new regulations come into force re-mortgaging is certainly likely to be more difficult than it has been up until now. That is not necessarily a good thing but it will, at least, result in both parties considering the advantages and the importance of retaining an existing relationship.
The other factor to consider is that many mortgage deals are arranged on a short term basis - on two, three or five year fixed or tracker rates so there is a natural point when the deal comes to an end when a borrower might re-consider their options. And, in fact, it is often better at that point to switch to a different lender; an issue that lenders must be aware of but seem to do little to resolve.
A professional mortgage adviser, concerned only with their client's best interests would always suggest regular reviews of mortgage arrangements to ensure they are still offering the best possible value. A borrower's personal situation may change significantly over the course of a mortgage period so this approach to regular reviews makes sense.
Indeed, a professional broker would not be doing their job properly if they failed to review a mortgage at key points within the mortgage term or when a client's circumstances changed.
Obviously, they would only recommend a re-mortgage where it would genuinely put the client in a better financial position. However, many homeowners could benefit from lower interest rates or from releasing capital.
Although any decision to re-mortgage should not be made just on the interest rate alone as there are other aspects to consider with regard to such an important loan as a mortgage; it would be a sorry state of affairs if the only difference between lenders of concern to the borrower was cost. Lenders themselves should be wary of allowing their product offering to reach this point.
A leading London mortgage broker specializing in large mortgages believes that for some clients the relationship with the lender is extremely important as it offers the opportunity for flexible loan arrangements but for other borrowers the most competitive rate is the most important element of a deal.
Source
