Siri, it seems, knows everything. When I checked in with her this morning she offered to report how the FTSE is doing, find my meeting notes, play some blues and remind me about my wife’s birthday.
I guess these are common questions, although I’m surprised about the blues – but maybe its Glasgow in January that’s precipitating a rush on blues requests.
Anyway, as Siri kept chucking out random topics to try and engage me in conversation, I thought I’d quiz her on a topic close to my heart “Why does it take so long to get a mortgage?” Clearly, it was a question she was familiar with and she bounced right back with a flurry of links to on-line articles all bemoaning the length of time it can take to get a mortgage application processed.
The length of time the different brokers claim the process takes varies considerably, from a couple of weeks to up to 100 days. In my experience, a reputable High Street bank pretty consistently takes around 3 to 4 weeks to process an application.
Why does it take so long to get a mortgage?
It’s not because banks are tardy – the mortgage market operates within a regulatory framework that was tightened up in April 2014 with the launch of the Mortgage Market Review (MMR). The biggest single change implemented by the MMR was that, prior to the regulation, eligibility for a mortgage was determined by what you could afford to pay back, which in turn was assessed by your income. The MMR changed all that, so that instead of just looking at your income, the lender now has to consider a borrower’s financial health, which means taking the time to assess your outgoings too.
And that’s a time-consuming process. The application and paperwork might pass through the hands of up to a dozen people, between them crunching through credit references, residential status, overdraft arrangements, bank statements, credit agreements, utility bills, phone bills and pay stubs. And of course, with every check, the paper mountain climbs. All the findings then have to be manually inputted and a decision made on the aggregated information. It’s a careful, thorough process as lenders respond responsibly to the requirements of the MMR regulations.
However, while all this is going on, buyers can so easily miss out on their dream home.
How do we speed up the mortgage process?
It doesn’t have to be this way though, as our customers have found. Castlight Financial is rolling out our Affordability PassportTM technology to mortgage brokers across the country, most recently with Paradigm Mortgage Services, part of the Paradigm Group, representing over 3,500 UK brokers. Our Affordability PassportTM technology platform allows applicants to share their transactional data with their lender at the tap of a key. This is then merged seamlessly with their credit rating, allowing mortgage brokers for the first time to access a depth and breadth of information about their client in just seconds. Can they or can they not afford the mortgage? No more delays for the house hunter, no more paper mountains for the brokers.
We are very close to getting the entire mortgage origination process down to 10 minutes, or in other words less time than it takes to make a toastie.