Paperless Mortgages are the Only Way to Go – All Lenders should be following NatWest’s Lead

NatWest recently became the first UK lender to launch a paperless mortgage, with the new offering promised to save customers a significant amount of time and hassle. Thanks to this new offering, NatWest customers can now apply for a mortgage online, upload the relevant documents, and sign everything digitally. The need for countless exchanges of printed payslips, bank statements, and face-to-face meetings has been eliminated. There’s no doubt about it; this is an important step in the right direction from a major lender and a welcome development that will greatly improve people’s homeownership experience. I’d now like to see the industry respond by setting an ambitious target date for when all lenders must follow suit.

As many homeowners will tell you, applying for a mortgage can often be a painful experience. In fact, research we’ve undertaken at Trussle has found that more than forty per cent of current borrowers have negative memories of securing their first mortgage. One in ten even admit to being brought to tears by the process. Much of this stress is caused by antiquated and outdated processes used across the mortgage sector, such as waiting weeks for a face-to-face appointment or having to spend hours answering question after question on the phone. These are things that have long been replaced by more suitable processes in other areas of their lives thanks to better innovation. The mountain of paperwork involved in the application process is another major culprit, as I experienced first-hand when trying to get a mortgage a few years ago. After spending weeks meeting with a broker and completing various documents, I was told that all of my paperwork had been lost, and that I would essentially have to start the process again. Sadly, stories like this aren’t unheard of. Yet they could be, if the industry took the relatively small leap, technologically speaking, to paperless mortgages.

Paperless mortgages will make the world of difference to first-time buyers, but those remortgaging will benefit too. Currently, borrowers trying to switch mortgage can run up against a number of paperwork-related problems. If they’ve misplaced their mortgage statement, they might have to wait up to six weeks for a lender to send them a replacement by post before continuing the remortgage process. This delay could prevent them from switching before they lapse onto their lender’s expensive Standard Variable Rate. Just a month on an SVR would cost the average borrower more than £400 extra in monthly interest. In contrast, a paperless mortgage would be available to download online 24/7, eradicating any delays.

We know from our own research that existing borrowers are more likely to suffer from switching inertia if they’ve had a bad experience securing their first mortgage; this inertia is costing the UK’s borrowers billions of pounds each year. Paperless mortgages will undoubtedly remove some of the friction that causes these negative experiences, and this is as compelling a reason as any for other lenders to follow NatWest’s lead.

The bank’s head of mortgages Lloyd Cochrane has said that their new paperless system will cut the remortgage application process from a maximum of 30 days down to 20. This is an immense improvement that will save customers time and potentially a lot of money. But wouldn’t it be great if remortgaging could be done in just a few minutes? If the industry’s willing to continue innovating, there’s no reason why this couldn’t be achieved.

Ishaan Malhi, CEO and founder of online mortgage broker Trussle