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Parachute applications

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 08. November 2022

Looking to speak to mortgage brokers about parachute applications, where you put PT and maybe several remortgage applications in. 

  1. Is this something that you have started doing? If so, when? 
  2. Do you think it is commonplace or will become commonplace? 
  3. What impact may this have on lender pipelines?

 

5 responses from the Newspage community

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Rob Peters
Principal at Simple Fast Mortgage
If this was to happen, lenders would meltdown. While, when markets are volatile, as a 'plan B' we might reserve a PT product and also consider a remortgage, we certainly won't be submitting droves of mortgage applications for a single customer. It's a bit like those folk who bought all the toilet roll up in the pandemic, and blocked up the petrol stations to fill up their vehicle by 30 pence during the fuel shortage. There may be some who do this but we won't be one of them them.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
All I hear from this is seven credit checks. It is excessive when applying for multiple remortgages when all you need is the best deal based on your client's circumstances. If you are taking the chance with multiple lenders because you believe rates will get better then opt for a tracker with no exit fees. People should the extra money they are saving to overpay their mortgage and reduce their interest. So when the rates do increase on your tracker, the increase in payments is less. I agree that taking the PT offer and trying a remortgage application can be an option but be careful. If you sign an acceptance with Santander for a PT, you cannot cancel it.
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Paul Holland
Mortgage Broker at Henchurch Lane Financial Services
Off the back of the mini budget and the damage that did to swap rates and in turn fixed rates, mortgage advice and product recommendations from a broker perspective became extremely difficult overnight. Fixed rates went from somewhere in the 4% bracket to close to 6%. I'd argue that's the difference between something many can stretch to, to a situation that is damning for many. Despite knowing this was somewhat of a knee-jerk reaction which could quickly rectify itself, a broker is still playing with people's financial future's when trying to direct them in such an unpredictable market. Some may feel the pressure of these decisions so much that their go to approach is to spread their bets. In my opinion, this isn't the right thing to do. At worst, if you can get away with securing a product switch with their existinglender which could later be pulled if better options rear their heads, then great, but nobody should be placing multiple applications with various lenders, clogging their pipelines and putting credit scores at risk as a result. Explain options, risks, pros and cons and client's should be able to make informed decisions as to what suits their risk appetite
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
My first thought on reading this was, "are people really doing this?". To me it simply makes no sense. If you have done your research correctly then there should be no need to take a shotgun, or blunderbuss approach to the application process. You should have already narrowed down the selection to a suitable product and a lender who has already confirmed the client meets their basic criteria (affordability, credit score, etc) and then make that one application. A good broker is like Tom Berenger not Wyatt Earp.
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Hannah Bashford
Director at Model Financial Solutions
This is not something that we will be doing because it can have a detrimental effect to our client's credit score and ability to secure a mortgage. Also, I can't see an application getting through with an underwriter because on the application form you often have to confirm if you have applied to anyone else for the mortgage funds and if brokers are saying no clearly that is lying and if they say yes then is an underwriter going to agree to all the time and effort just because the broker is hedging their bets? We are contacting our clients 6 months before their current mortgage ends and securing the best rate possible for them, at that time, with a view to looking at it again within 3 months of their completion date because the market is so volatile, but we wouldn't be putting in numerous applications. The lenders can barely cope with the volume of business as it is with underwriting often taking several weeks so if we started pushing through multiple applications for the same client the system would fall over and it would be even more painful than it is now!