Posted on 16th February 2020 at 18:28
Are Free Mortgage Valuations and Legal Services Worth It?
Nothing is ever absolutely free and this is absolutely true of financial services. How could a re-mortgage service be free?
When it comes to lenders offering free mortgage services the cost is usually off-set by a very slightly higher interst rate, or fixed fee on the mortgage.
There are usually two things that are bundled together in a mortgage deal; the valuation and legal work. On the face of it these two can save an applicant hundreds of pounds. Is this a geniune saving though? Given that there are possibly lower rates to be had if a client pays for the legal work and the valuation, it may arguably be that over time, the free services are more expensive due to the higher interest rate needed to obtain them.
There is little that can go wrong with a valuation, especially where the loan to value is quite low. However, when it comes to legal work, this is a service that requires input at multiple stages, from multiple sources of information. It requires communication, experience and skill to be done efficiently, and herein lies the problem. The high volume of work and relatively low revenue for conveyancing firms frequently results in very poor performance. Whilst there is an initial saving on cash outlay for a re-mortgage with free legal services, the actual cost can be very high if there are delays in the process. In our experience some delays have resulted from incompetence and desperately poor management skills. (Something about monkeys and peanuts comes to mind)
Why does it matter? It matters because delays can force an applicant into their standard variable rate period, which invariably will be at a much higher interest rate than the old mortgage or the new one. This means that those "free services" can cost a client many hundreds of pounds in mortgage payments that had not been expected.
What is the solution?
The answer is to take the conveyancing work for the re-mortgage into your own hands. Do not rely on a lender conveyancer.
Many lenders have introduced cash-back schemes to pay for the cost of re-mortgage legal work. My advice is to opt for the cash incentive instead of the free legals if you want to save money and then appoint your own conveyancer for your mortgage or re-mortgage work.
If you need help in this The Mortgages Company has an excellent network of legal firms to tap into.
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