It has been a relatively slow start to fully integrating second mortgages into the solutions being provided by mortgage advisers around the UK, but like all significant change it will take time. Collaboration between specialist packagers and mortgage advisers is a fundamental requirement to make this happen.
Paul McGerrigan (pictured) is chief executive officer of Loan.co.uk
Modern day mortgage advisers have a lot to keep up to date with to ensure the advice they give stays current and accurate. In today’s world new rates and new products appear daily and there are many 1000’s of different options for their clients in the market.
Whilst sourcing systems can have their place they are far from 100% accurate and due to the intricacies (and in some cases inconsistencies) of lenders, the knowledge and understanding an experienced mortgage adviser can bring is fundamental.
Over the last three years new lenders have stormed into the sector at a pace, with the emergence of more and more challenger banks. With that, each lender brings new products, new processes and procedures, new systems and new underwriters to work with. All of which means further learning to stay ahead of the game.
On top of the increasing number of products, there is also the ever-changing regulation to be aware of e.g. the recent changes in the treatment of buy-to-lets and of course MCD last year.
Taking all of this into consideration, mortgage advisers have to work hard just to keep their knowledge where it needs to be alongside continually improving their knowledge on the multitude of insurance products they advise on.
I think it is fair to say the role of a professional mortgage adviser is extremely challenging today just focussing on their ‘core’ product offering.
Life insurance, critical illness, income protection, home and contents, landlords and other insurance products also require continuous learning to ensure accurate and relevant advice.
With these products come new clauses, additional benefits based on new conditions, the removal of benefits, single products versus multi products, trusts and much, much more to get to grips with.
When it comes to second mortgages and their place post-MCD of where they fit alongside first mortgage products the fact is that second mortgages are still not being considered by every mortgage introducer.
For me there has been a lot of talk about second mortgages in the trade press, by networks, mortgage clubs, lenders and second mortgage packagers but not enough activity.
I would caveat that by saying it is however going in the right direction and there is definite traction.
Just to be clear on what the motivation is for all concerned here – it’s best advice for clients! We have an obligation to provide the best short and longer-term advice to our clients.
I truly believe mortgage advisers cannot say they provide best advice to their clients every time they are asked to raise extra funds if they are not investigating a second mortgage.
Just to be clear – I am not saying that if a customer needs £20,000 and their current mortgage lender offers a further advance at a 1 or 2% rate with minimum fees and minimum fuss, a second mortgage is going to compete. It’s not.
If, however, a customer cannot raise the funds with their current lender and a remortgage is looking very expensive, or for some reason is not possible then a second mortgage must be at least researched.
I can hear the cry as I write this “He would say that!” Of course I would but that doesn’t take away from the fact that it is true.
I am CEMAP qualified and was a mortgage adviser myself for several years. I firmly believe that each and every mortgage adviser in the UK comes across at least one client a year who wants to raise extra funds and cannot via the traditional remortgage route where a second mortgage would be the right advice.
Equally I have no doubt that mortgage advisers are asked to raise additional funds and are advising their clients not to take on an overly expensive remortgage (correctly) because of high ERC’s or charges. As a result, they are not providing a solution for their clients.
Only with an understanding of seconds and a trusted partner with significant experience in seconds can mortgage advisers truly investigate every option for their clients.
So how do we get there? I think everyone has a role to play. The reality of the structure of the market as it currently stands is that only a couple of lenders are geared to accept business directly from mortgage advisers and the vast majority of mortgage advisers do not yet have the knowledge to be able to package directly to lenders anyway.
This current reality means that it falls upon the specialist packagers such as Loan.co.uk (often supported by lenders) to be the conduit of knowledge and expertise.
We have established at the beginning of this piece that all mortgage advisers have a huge amount on their plate already so it falls on us to provide simple, clear and easy to access information on the products and the market.
After that it is about making ourselves available to answer questions, discuss individual circumstances and process cases – which we are.
Technology has an increasing part to play in this (and we are investing heavily to innovate in this area) but so do people. There is still a huge amount of manual work in second mortgages (as there is in first mortgages). This involves people talking to other people and that relies heavily on strong relationships.
It takes a lot of trust for a mortgage adviser to refer a client to a master packager. I completely understand this and so do my team.
The client may have been a client of the mortgage adviser for 10, 15 or even 20 years. There needs to be a huge amount of confidence in the service and advice we give as a second mortgage company to pass that client over for the purposes of finding them a solution.
We have a growing team of carefully selected experts with years of experience in the second mortgage market. We have also identified that there are regional differences and the feedback from our mortgage adviser partners is that they like to deal with a local office.
To address this need we have therefore established six (soon to be seven) regional offices around the UK.
So in summary I think it has been a relatively slow start to fully integrating second mortgages into the solutions being provided by mortgage advisers around the UK, but like all significant change it will take time.
Collaboration between specialist packagers and mortgage advisers is a fundamental requirement to make this happen.
We will continue to play our part and ask only that when our regional business directors call and offer up their time to come to the offices of mortgage advisers and add to their CPD hours with second mortgage training that they take aside an hour of their day to learn.
It will be to their benefit and most importantly to their clients benefit.
