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Mortgage View: Loyalty has to be earned

Is remortgaging going out of fashion? That is what lenders would have us believe, insisting that the new breed of products they are launching will do away with borrowers ever having to remortgage again.

Sounds great if you happen to be the lazy, apathetic type who thinks they have got better things to do than shop around for a new mortgage every couple of years. Of course, the sensible borrower will let a broker do all the hard work for them. What bothers me is that borrowers may be lulled into a false sense of security and not bother to consider whether there might be a better deal out there.

Take, for example, the Freestyle Flexible mortgage from Standard Life Bank. The rate reduces from 5.8 per cent in year one to 5.65 per cent in year two, 5.55 per cent in year three, 5.45 per cent in year four and 5.4 per cent for the remainder of the term.

But there are more competitive rates out there for those who can be bothered to look every few years. The best two-year fixes come in at under 4.4 per cent, while the most competitive two-year trackers start at 0.16 per cent under base rate. The client will have to pay some costs towards remortgaging but it may be worth it in the long run.

The thing that really gets lenders is that “rate tarts” have no loyalty. But why should they? It is not like supporting Crystal Palace, when you stick with your team no matter how badly they are doing. Lenders need to earn loyalty in terms of rates and products that remain competitive year in, year out.

But if lenders did manage to offer such great products that there was no point in remortgaging, what then? What would happen to the old-fashioned broker? The sensible ones have realised that there is more to do for clients than just arrange their mortgage.

There is a whole array of financial products that the client needs. What about insurance, not just of the property but its contents, the client’s buy-to-let portfolio, their family and their life?

Does your firm have the expertise to offer an international mortgage in house or will you be forced to farm out the business to a company that specialises in this, such as Savills Private Finance?

What if a client wants to get into commercial finance? Are you equipped to handle that? It would not do to forget the wide range of wealth management options that are integral to the client’s overall financial health.

It has taken SPF eight years to get to the stage where we can offer the complete package to clients. If, at some stage, remort- gaging is no longer an option, other brokers may wish they had the same capability.

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