Delays in getting paperwork from management companies are leaving leasehold homeowners unable to remortgage to fixed-rate deals, which is costing them thousands of pounds in extra interest, brokers say.
When you come to remortgage, you can typically lock in a mortgage deal up to six months before your current deal ends to give you plenty of time to get one sorted.
However, if you remortgage with a new lender, you will need to go through their mortgage process as if it is a new purchase.
If you own a leasehold property – where you own the property, but not the land it is on – this can involve having to get documents from the management company, such as information about your insurance or service charges.
Management companies oversee the communal areas of leasehold properties and manage paperwork relating to the block, house or estate.
square PROPERTY AND MORTGAGES Home buyers could spread stamp duty over several years in new plan
Read More
However, a number of experts and homeowners have reported that getting the required information from these companies is taking months, or in some cases is proving impossible to get hold of at all.
For those remortgaging, this is forcing them to move on to their lender’s standard variable rate (SVR) while they wait for all the paperwork, costing them thousands of pounds in interest.
SVRs are typically much higher than fixed-rate or tracker mortgage deals. The average SVR is currently 7.32 per cent, according to Moneyfacts, while a typical two-year fixed rate stands at 4.96 per cent.
If you had a £300,000 mortgage on a 25-year term, you would pay £435 more a month on a 7.32 per cent rate compared to a 4.96 per cent rate. Over several months, this could rack up to thousands of pounds extra.
Michelle Lawson, director at mortgage brokers Lawson Financial, said she has seen these delays affecting clients, and has often had to intervene and push the management companies herself.
“These management company delays are not just costing clients time, but money,” she said.
“Standard variable rates are anything from 6 to 10 per cent at the moment, which relates to much higher mortgage payments for borrowers, adding hundreds of pounds to their outgoings while everyone else pushes paper around.”
Adam Stiles, managing director at mortgage broker Helix Financial Partners, said the delays are “unfair” as they are out of homeowners’ control and yet are landing them with huge mortgage costs.
“Housing associations or management companies can take a huge amount of time in replying each time information is requested, which is painful for all involved, especially the borrower,” he said.
“Often the borrower is paying [the management company] a lot of money for a service charge, but getting next to no service in return.
“Lenders can often be over-zealous in what information they are asking for, which amplifies the problem,” he added.
How to avoid delays when remortgaging
If you are attempting to remortgage and cannot get hold of your management company, explain the situation to your conveyancer or mortgage broker as soon as possible, as they will be able to speak to your lender for you.
They may then contact the management company directly to ask for the required information, which could speed things up.
Experts say the best way to avoid issues is to remortgage as soon as possible before your current deal ends, as this will give you more time to account for delays.
Karen Noye, mortgage expert at Quilter, said: “Anyone approaching the end of a fixed deal should consider securing a new rate early to avoid moving onto a more expensive standard variable rate.
“Many lenders allow borrowers to lock in a deal now and switch later if better options become available before completion, which can offer some flexibility in a shifting market.”
Lawson added: “Apply for your remortgage at the earliest opportunity to allow time to get this completed before your product ends.
“Many people underestimate the time remortgages take these days, so many leave things until the last minute and then face these delays. Also, get a good broker on board to help you chase things up.”
It is a good idea to be aware of what you will need in advance before you start the remortgaging process.
If you are remortgaging a leasehold, you will likely need the following documents from your management company:
Information about ground rent and services charges Information about any expected increases in ground rent or services charges Buildings insurance details about the block or house you live inHence then, the article about the paperwork delays costing leaseholders thousands of pounds was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( The paperwork delays costing leaseholders thousands of pounds )
Also on site :
- We Finally Paid Off Our Last Piece of Debt. I Didn’t Expect It to Backfire Like This.
- More than 700 to be laid off as U.S. Postal Service terminates contract for Aurora mail hub
- Who Is Scarab on ‘The Masked Singer’? You Can’t Beet-le These Guesses!