www.mortgagestrategy.co.uk ANALYSIS
There’s nothing new about
promotions for free legals
as lenders have been
offering these on
remortgage deals for years.
It’s easy to understand why – it
makes remortgaging cheaper and
easier for borrowers and fee-free
deals are an easy sell for brokers.
But there is a fly in the ointment
as free legals means no legals at all.
When lenders offer free legals what
they are really saying is that they
are willing to pay a lawyer to look
after their own legal needs, but they
are not willing to pay for someone
to look after borrowers’ interests.
What it boils down to is that
borrowers have no legal
representation and if anything goes
wrong they’re on their own with no
right of redress.
You might argue that this isn’t a
It won’t come as too much of a
surprise to regular readers of
Mortgage Strategy to receive
further confirmation that I’m
anti-Home Information Packs.
Neither was I swayed from this
view by the positive outcome in
favour of HIPs, attributed to Land
Data’s recent Great Housing Debate
hosted by the Wriglesworth
Consultancy.
It strikes me that you’d get a
similarly predictable result if you
held a conference for turkeys and
asked them whether they’d vote to
abolish Christmas. Of course those
with vested interests are going to
vote for something that benefits
them. But my problem with HIPs
isn’t with what they are supposed
to achieve – I’m not anti-reform.
HIPs don’t add any value to the
house purchase transaction. They
simply create added bureaucracy,
Free legals simply
means no legals
EDDIE GOLDSMITH
SENIOR PARTNER
GOLDSMITH WILLIAMS
big deal as remortgages are merely
exercises in shuffling paper with no
major legal issues at stake
But I’m aware of borrowers who
have been left with costs that could
have been avoided if a lawyer had
looked after their interests.
To make matters worse,
disgruntled borrowers may decide
to take action against the brokers
who recommended these schemes.
I’m not saying brokers should
avoid fee-free legal deals but ideally,
lenders’ fee-free promotions should
make it clear to borrowers that they
have no legal representation and, if
having this is important, they can
arrange their own legals.
I’m not sure lenders will rush to
print such a disclaimer on their
promotional literature so perhaps
brokers should think about issuing
one instead.
HIPs need to be put
out of their misery
PETER MOUNTY
DIRECTOR
COMMUNICATION PLUS UK
jobs and government revenue.
So I remain firmly in the camp
that says they should be scrapped
and we should start again. One of
the problems we have is our
obsession with fixing things and
then creating solutions that are far
more problematical than what we
were trying to fix.
And that’s exactly where HIPs
are today, along with health and
safety and political correctness. So
despite the groundswell of opinion
from the 150 professionals with
vested interests I think the Tories
should scrap them.
The packs have limped along for
so long that the humane and decent
thing would be to put them out of
their misery. But I agree that the
lessons we learnt from their
introduction were useful so
starting over doesn’t necessarily
mean starting from scratch.
Stress, anxiety and
depression are the biggest
causes of long-term
sickness, according to our
research and with reports of
rising redundancies and house
prices continuing to drop, you can
see why they’re on the rise.
Our research implies that far
from being a population living in a
benefit culture we are a population
living in benefit ignorance, with
half of us thinking we are entitled
to nothing from the state if we
suffer sickness, disability, death or
redundancy.
Only a quarter of us believe the
government will provide any sort
of sick pay if we are off work for a
long period, and more than a third
think the state will pay nothing if
we are unable to work again
through sickness or disability.
Equity release, like any
lending, is based on the
opinion of professional
valuers, backed by
comparable evidence of
property sales completed in
recent times.
But in a market which
some say is stagnant,
while others talk of
freefall, it is difficult to
be sure of a property’s
value. The old adage,
“something is worth what
someone will pay for it”,
comes to mind.
Interestingly, this month
a valuation came back to the
office with a market figure of zero
which, as an economist, made me
wonder how such a figure could be
achieved as the house was
substantial and in good condition.
The answer given by the
We are living in
benefit ignorance
IAIN MALLON
DIRECTOR OF PROTECTION MARKETING
AXA
JON KING
MANAGING DIRECTOR
HODGE LIFETIME
But even with state support,
families that haven’t made
provisions could be heading for
financial disaster.
For example, state incapacity
benefit or statutory sick pay
provides less than £400 a month
whereas the average household
expenditure is £450 a week.
By making sure your clients
have considered how they would
cope should they become too sick
or injured to work, they may
realise that the state wouldn’t
provide enough to survive and
their own provisions and any help
their family could offer might not
suffice either.
One of the only ways to make
sure your clients can maintain
their own and their family’s
lifestyle is by protecting themselves
as well as what they earn.
Hard to judge true
value of property
surveyor was that big houses are
not selling and therefore they have
no value in the short-term.
A remarkable philosophy and
I’m pleased to say we made a
mortgage offer on the property
based on a more realistic but
perhaps more artistic view
of its true value.
But this episode
reminded me that the
role of surveyors is
as much about the
softer side of the
valuation as it is about
bricks, mortar and
insurance replacement
calculations.
It also reminded me that we are
in the middle of perhaps the
deepest recession in recent memory
and it is everyone’s responsibility
to check and re-check assumptions
we previously took for granted.
MORTGAGE STRATEGY May 4, 2009 13
To view a Ceros magazine you need to have JavaScript enabled in your browser and have the flash player 8 or higher installed. To install the latest flash player, click the icon above, install the flash plugin and then click here to refresh this page.