When you buy or sell a home, you'll need to appoint a conveyancer or solicitor with expertise in property, who has an important role to play.
Your lawyer has lots of jobs to do to make sure the purchase goes through smoothly.
And one of the most important things they handle is requesting the mortgage settlement from your bank or building society.
This means that mortgage funds will be released by the lender and sent to your solicitor's account, ready to be transferred in time for exchange of contracts and completion.
One relatively new digital tool that can help your solicitor to do this is called Lender Exchange.
Here’s what you need to know about how it works:
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What is Lender Exchange?
Lender Exchange is a secure online portal that enables legal firms to exchange information with mortgage lenders.
The idea behind it is to minimise the risk of fraud, by enabling banks and solicitors to work on sales check data safely.
It also helps to save time on administration by ensuring both the banks and solicitors can ensure what they’re being told is legitimate.
What’s the background on Lender Exchange?
Lender Exchange was launched by Decision First around ten years ago.
The digital service was designed to help with communication between solicitors and mortgage lenders.
Major banks and high street lenders, including HSBC, Santander, Lloyds and the Royal Bank of Scotland use the service to send mortgage offer information electronically.
The mortgage offers can then be received quickly and checked by solicitors. This is much faster than traditional post or document exchange.
How does Lender Exchange work?
When a mortgage offer is made by a lender they provide a mortgage deed form, which solicitors then pass onto the buyers for their signature.
Before Lender Exchange, mortgage offers were often sent without these documents.
A solicitor would then need to request the forms and they would be sent via the post or document exchange. This process took longer and made it harder for solicitors to check the documents' validity.
With Lender Exchange, mortgage deed forms can be downloaded instantly. This takes away unnecessary delays and means solicitors can check the details quickly.
Why is Lender Exchange important?
According to Lender Exchange’s creators Decision First, banks and mortgage lenders “have experienced a significant risk from mortgage related fraud which has led to substantial losses.”
As a result, lenders needed to ask solicitors for more information about the individuals they represent, and providing this data takes time and adds complexity to the purchase process.
Decision First says it developed the Lender Exchange system “to enable law firms to easily provide lenders with the information they need to manage their panels and satisfy the additional regulatory requirements on lenders to conduct increasing levels of due diligence.”
The benefit for law firms is that they only have to enter their client’s data into the Lender Exchange once and this can be checked by multiple mortgage providers.
Who uses Lender Exchange?
If you’re buying or selling a house, you’re not going to access Lender Exchange yourself.
The solicitor representing you in your sale or purchase might.
So might the bank or mortgage lender you come to use.
Not every solicitor or mortgage lender uses Lender Exchange, but it can speed things up if they both have access.
So it can be a useful question to ask when you're deciding on solicitors and chatting to mortgage brokers or directly to high street banks.
What does it cost to use Lender Exchange?
It costs solicitors an annual fee of a few hundred pounds to use Lender Exchange software (the fee depends on the business' size and how many users it has).
If you’re a buyer or a seller, you won’t have to pay directly for Lender Exchange. It will most likely be rolled into your overall solicitors' fees, which might be either a flat fee or billable by the hour, depending on what you have agreed.
What are the benefits of using Lender Exchange?
It makes the exchange of data and documentation quicker and easier in a secure setting.
Solicitors need only enter their client’s information once, rather than responding to multiple requests. Banks and high street lenders can send mortgage deed documents instantly that solicitors can download and check and pass onto clients.
Lender Exchange helps to speed up the process, as solicitors won't need to keep submitting the same info to multiple lenders. This saves money for buyers (in terms of solicitors’ fees) and also saves sellers time.
Is my information secure on Lender Exchange?
The platform is secure and designed to prevent fraud. This means that arguably your data is more secure on Lender Exchange than it would be if your solicitor was fielding multiple requests for your data from lenders and sending forms in the post.
Decision First says: “We adhere to stringent levels of security, meaning all data is encrypted and held in a secure database.”
Can I always use Lender Exchange?
Not all banks and mortgage lenders and solicitors use the Lender Exchange portal.
In some cases, lenders will only instruct their own solicitors when approving a mortgage. This means, if a buyer’s solicitor is not on the mortgage provider’s lender’s list of approved solicitors (known as their “panel”), they may have to apply to join their panel. If this doesn’t work, a buyer or seller may have to use a different solicitor or pay an additional fee to get an additional solicitor to access the Lender Exchange.
What else does my solicitor need to do?
From keeping chains moving to negotiating on your behalf, having a good solicitor is as important when you're selling a house as when you're buying one.
Your solicitor will handle all of the legal side of the selling process on your behalf.
This includes:
preparing the legal contracts and sharing them with your buyer’s solicitor
requesting a mortgage settlement figure from your lender
obtaining the title deeds, which prove you own the property, and arranging for them to be transferred over to your buyer
supporting you in completing the necessary Property Information and Fittings and Contents legal forms
identifying any boiler, gas, electric and FENSA certificates you'll need for your buyer
liaising with your buyer’s solicitor to set moving dates
handling any issues that arise during the conveyancing process
liaising with other solicitors in the chain to set up the exchange and completion dates
handling the proceeds of the sale for you, including receiving the deposit from your buyer when you exchange contracts
But your solicitor’s role does not end there.
They'll also settle the mortgage and pay your estate agents' fees from the proceeds of the sale.
If there is money left over, they will transfer it to you.
Find out more about how solicitors help you buy or sell homes in this guide.
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