Remortgage concerns due to credit score rejection - to PT or not to PT?

It’s been well publicised that there’s a big remortgage opportunity heading brokers’ way due to the vast number of fixed rate products coming to an end at the end of this year. The size of that opportunity depends on which report you read, but estimates have ranged from £29bn to £40bn worth of mortgages that are due to mature in the coming months.

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Paul Adams | Pepper Money
17th November 2021
Paul Adams Pepper
"The market is incredibly competitive at the moment, with lenders competing fiercely both on rate and also on making their propositions available to a wider group of potential customers."

Of course, not all of these loans will be remortgaged. Some customers will simply choose the perceived convenience of a product transfer (PT) with their existing lender, either through a broker or direct with the lender.

Often a PT seems like the right option because a customer’s circumstances have changed since they applied for their current mortgage. Maybe they have become self-employed, or perhaps they’ve picked up some adverse credit. The last two years in particular, have done a lot to shake up people’s circumstances and so a customer who is coming to the end of a two, three or five-year fixed rate could be forgiven for believing the PT rate they are offered by their existing lender is the best they are able to get. Or perhaps they could have concerns the application may fail due to credit score. In some cases, it might be, but as you know, the market is incredibly competitive at the moment, with lenders competing fiercely both on rate and also on making their propositions available to a wider group of potential customers.

This means that there are low rates available to people who are recently self-employed, have some adverse credit or simply have a set of circumstances that wouldn’t fit a standard credit score. At Pepper Money, for example, we have launched a Pepper 60 range, available to customers who haven’t had a CCJ or default in the last 60 months, with no credit scoring, and with rates from 1.98%.

Lenders are also making it easier for customers to remortgage with the introduction of incentives such as free legals and cashback offerings that contribute to legal fees, enabling the customer to choose their own solicitor. And, of course, we have seen the increasing use of AVMs by lenders on remortgage cases where the loan size and LTV allow and this can streamline the process, enabling a remortgage case to complete more quickly. At Pepper Money, we have rolled out the use of AVMs on our remortgage cases following a successful pilot during which we were able to issue an offer within 48 hours of the application.

As a consequence of these changes, securing a competitively priced remortgage product is now achievable for a wider group of customers, even if their circumstances have changed since taking their previous mortgage. Lenders such as Pepper Money are committed to ensure remortgaging becomes quicker and easier for more customers.

Another consideration is capital raising. The end of a mortgage deal often provides opportunity to raise extra funding for large items of expenditure, such as home improvements, and many customers see it as a time to consolidate debts to manage their monthly repayments. With interest rates tipped to rise next year, now may be the time to discuss your customers’ capital raising requirements – and these can’t be addressed with a PT.

So, when it comes to asking “To PT or not to PT?”, it’s always worth checking all of the remortgage options first, and understanding your customers’ future plans when it comes to capital raising requirements. In this competitive market, your customers could benefit from switching lender and it could be quite easy for them to do so.

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