Clients may receive worse deals from inexperienced advisers, it's warned
Increasing numbers of ‘fly-by-night’ mortgage brokers are adding the word ‘specialist’ to their titles to make money, without the experience to back it up, it’s claimed.
Luke Egan (pictured), from Truffle Specialist Finance, suggests clients could end up with worse deals as a result.
Truffle, based in Cardiff, provides specialist finance packaging and distribution services to advisers.
Its director of bridging and development finance believes that “clients getting the right advice from the right people” is the biggest barrier to success for brokers in the current market.
“More and more mortgage brokers have just added the word specialist to their title and then will buddy up with one lender,” Egan told Mortgage Introducer.
“The client will end up with a worse deal simply because they chose that broker and not someone who truly has their best interest at heart, someone who has the experience and expertise to get them what they want, and more - not a fly-by-night company that set up after doing a few mortgage applications and saw there was money to be made.”
How can politicians better support the mortgage industry?
Egan wants to see improvements to HM Land Registry and considers that the government is failing to support the industry as much as it should.
“Not nearly enough is being done and we come back to the same problem, the planning process - until this is fully automated and we remove the archaic process that belongs in the dark ages,” he commented. “The government should invest in a new streamlined, partially automated application process.”
More encouragingly, Egan is enthusiastic about the way 2024 has started for the mortgage industry.
“I’ve never seen it so buoyant,” he observed. “We had a fantastic end of year, January topped last year. So, it’s fair to say bridging and commercial is on the up for us.”
As a packager, Truffle has what it describes as a vast network of private and mainstream funders to provide traditional second charge lending, with loan advances from £3,000 to greater than £2.5 million, and bridging finance solutions from £25,000 to £25 million. It recently announced that 2023 was a record year for its bridging operation.
Egan was appointed as bridging and development director to what was then Pink Pig Loans in 2021. The specialist finance firm rebranded at Truffle in March 2022, as the firm looked to increase its presence in the bridging loan market.
“I started out with Barclays in 2005 as mortgage adviser,” Egan said of his career. “This was my first taste of the property industry and I liked what I saw. I then moved on to help establish Pure Commercial Finance, now Pure Property, and this is what got me into the bridging and commercial world, which is where I believe my expertise lies.”
READ MORE: The specialist finance director whose grandmother encouraged her to industry success
How well is the specialist finance sector performing?
Truffle Specialist Finance has reported an almost 200% increase in the amount of bridging business it’s written and its number of completed cases.
What, then, does Egan consider will be the biggest development in the industry this year?
“I think - and hope - it’s going to be more lenders automating certain parts and taking more of a commercial view,” he stated, “specifically, with an automated valuation. The technology is there and is being used by others. I feel if lenders don’t embrace this, they may get left behind.”
Egan values one particular business lesson from his own career.
“Don’t take anything for granted, particularly in bridging,” he shared, noting that even though brokers may seem like ‘indestructible world beaters’ on one day, particularly in tough times - such as Brexit and recessions - they may not be trading the next. But Egan enthused: “It’s what I really love doing.”
