Many years ago, the company I represent realised the importance of regular reviews for existing clients. As a result, most understand that they do not have 20, 25, or 35-year mortgages but actually have terms of two years (or whatever the penalty period is). This allows them the flexibility of their next mortgage being appropiate to their current circumstances. It might mean reducing or extending the term, borrowing extra for home improvements or debt consolidation, changing from tracker to fixed, or paying off lump sums. Circumstances might mean a five-year fixed is appropiate. I explain that two-year deals offer flexibility, a five-year fix offers stability. Even lifetime trackers come into consideration.
It is important that clients are 100 per cent happy with what they are doing, so being able to demonstate why you are recommending a particular firm and its product is essential. Laptops in the clients’ homes and Trigold have been invaluable.
This brings me to the reason for my letter and the effect lenders offering retention products will have on our industry. Nearly all the adverts I have seen push the point of how easy and quick it is to carry out transfers and how advisers will be paid proc fees for keeping clients with them. The fact of the matter is we can only do this if we can prove it is in the client’s interest and not ours. The problem is that every client is different and some will be happy to stay with a lender if you can only offer them savings of £10 per month, while another will see that as vital to their budget.
I have found that by using Trigold and the various filter options in front of my clients, I am able to easily justify my recommendation to them. If there is no saving to be made by leaving, they stay. However, if you can show there is a saving between the best deal and the lender’s retention product and explain that, although it will cost about £300 to leave, there is still an actual saving, then you recommend the new lender. By doing this a number of things are achieved.
Clients know why they are staying or leaving, they know that they will have to deal with the lender’s conveyancers and that to save money they have to be proactive in the process. They know I’m not taking the easy way option as I have a lot more work to do in submitting a new mortgage – it reinforces their confidence in me and my firm and with this comes future business and referals. Also, with potential accusations we might face from things such as cascading, this is one area we have to be extra careful not to be seen as taking the easy route. Lenders might finally realise that keeping customers means offering competitive products, not glossy adverts offering easy options.
Rob Nicholls.
Manager, Mortgage Review
