"It’s no secret why free legals appeal to lenders"
September has long been one of the more active months of the year - it marks the end of the summer slowdown, with a spike in purchase activity as people have finished their holidays and return to everyday activities with such as moving home.
Those busy purchase months translate into remortgage spikes a couple of years down the line - that two or five-year fixed rate deal nears maturity, meaning clients need to move swiftly in order to avoid the payment shock that comes from dropping onto the lender’s standard variable rate (SVR).
Proactive intermediaries will have been contacting their clients well in advance to highlight the benefits of remortgaging, though we all know that some clients will leave it until the last moment. Intermediaries will also hear from new clients keen to find a cheaper rate, particularly given the ongoing cost of living crisis and the increases in base rate we’ve already seen this year.
How long is this going to take?
Obviously, the benefit from being so proactive is that you and the client have plenty of time to move onto that new rate before the borrower lands on the SVR.
That’s the idea, anyway. Unfortunately, the reality has been rather different, as a result of the legal delays. It’s not just those who are hoping to purchase a new home who are suffering backlogs and prolonged processes because of these legal delays - they are impacting clients hoping to remortgage too.
First and foremost these delays are enormously frustrating for everyone involved in the case, but there is a cost impact too - we know that there have been cases where the result of those hold ups has been the client falling onto the SVR for a month or two, and having to cough up the additional mortgage repayments, before finally moving onto their new, more budget-friendly deal.
The cost of ‘free’ legals
It’s true that the entire legal side of the property market is under pressure due to the heightened activity levels, but it’s undeniable that the heart of many of these issues lies in so-called ‘free’ legal offers.
While some legal businesses have been able to scale up their operations to deal with greater workloads, that hasn’t been the case with the free legal providers.
Batches of cases are being sent to these providers, who take them on at a low cost per case, with the intention of quickly turning around large numbers. Yet not only do they not have the staff numbers to cope with the number of cases, they also aren’t employing experienced conveyancers who know what they are doing, which inevitably leads to issues and mistakes.
And as a result, the delays that clients are having to deal with are extraordinary - we have heard of borrowers waiting 18 to 20 weeks for the legal elements of their remortgage to go through, a timescale that is unacceptable at the best of times, let alone when finances are already under strain thanks to the rocketing rate of inflation.
Whose side are you on?
It’s no secret why free legals appeal to lenders. It’s another supposed selling point to their deals for borrowers, removing one of the financial barriers that hard-pressed remortgagors could do without.
In theory, it also saves the client time, since they don’t need to hunt around for a conveyancer themselves.
However, it’s worth remembering that with a free legal firm the conveyancer is working on behalf of the lender, rather than the consumer - as such, having true, open communication with the intermediary and client is somewhat down the priority list, which only adds to the stress involved.
We can do things differently
At eConveyancer, we passionately believe that the conveyancing space is ripe for disruption, and that we can handle things in a more positive fashion.
We have built a comprehensive panel of conveyancers, allowing intermediaries to help their clients select a legal firm with expertise in their particular area - after all, how many cases today are truly vanilla?
That panel is then vigorously managed to ensure that they not only maintain the high standards expected, but also have the capacity to take on the cases intermediaries and their clients need. That hands-on approach means we can ensure that workloads are distributed most effectively, with a proper support channel in place to provide answers and assistance whenever issues arise.
By sensibly utilising technology, and putting resources in the right places, we can ensure that the conveyancing journey is far more straightforward, open and less stressful. Crucially,it can also work much faster, reducing the chances of clients paying more than necessary as a result of avoidable delays to the legal process.
