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Home buyers are being forced to wait months for basic legal work to be carried out being prompted to use the free legal service offered by their mortgage lender.
High street banks, keen to attract new customers in the current slow property market and many, have been offering free legal work to their mortgage customers as they try to sweeten the deal.
However, customers opting for the seemingly good deal have faced huge delays to their house buying process as basic checks and paperwork went undone.
In one instance, a couple who had been married for 34 years were told they could not receive the proceeds of a property sale because their relationship could not be determined.
Mark Harris of SPF Private Clients, mortgage broker, said: “Lenders who can’t compete by offering the cheapest mortgage rate on the market have been looking at other ways to attract business.
“Free legal fees is a popular offer, costing them very little and appealing to borrowers who are already strapped for cash and want to save money where they can.
"However, it can be a false economy if it holds up the purchase or threatens it taking place at all.”
Mr Harris said one customer, who was remortgaging to another lender, spent weeks paying higher interest rates because the legal work took so long to be carried out.
Chris Sykes of Private Finance, a mortgage broker, said one of his clients selected the free legal option but then had to wait more than six months for the work to be carried out. The mortgage offer expired and they had to take out a more expensive loan.
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One mortgage customer paid £1,700 in additional interest because the free legal firm made basic errors with their case.
Mr Sykes said he strongly recommended borrowers pay for their own legal representation. “There is often a cost to the client associated with the long timescales using the free legals which would mean they would be better off paying for their own solicitor,” he said.
He added: “Lenders are increasingly offering cashback towards your own legal services so this is good. Not every situation is dire but there are often issues.”
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