One of those companies is Freedom Lending, which launched into the UK intermediary mortgage market in May 2004. The business has grown rapidly during the past couple of years. In its first year, completions totalled £125 million followed by £250 million in the second year. Year three has started spectacularly well and the company is on target to complete over £800 million in the full year. Just as importantly, it has also consistently offered a first-class service proposition to brokers.
The success of the company becomes less of a surprise when you realise who the team is behind the business. The man at the helm is Colin Snowdon, who was responsible for launching The Mortgage Business (TMB) in 1989. He then established Verso in 1998 and built it into a major specialist lender before Britannia merged it with Platform in 2003.
Importance of experience
Snowdon recognised the importance of recruiting an experienced and proven senior management team and, unsurprisingly, persuaded his ex-Verso colleagues to travel a few miles further North to join the new business, which is based in Wilmslow, South of Manchester.
The Freedom Lending senior team consists of Snowdon, managing director; Richard Spinks, director of lending; Lillian Starkie, head of operations; Mel Dring, head of marketing; Richard Hughes, head of finance and Bruce Gaitskell, executive director – corporate finance. Snowdon says his team stands comparison against the very best in the industry and, based on Freedom Lending’s progress to date, there are few who would argue with that assertion.
Freedom Lending’s launch in 2004 was deliberately kept a low-key affair, with the management team preferring to ensure systems and infrastructure were robust before loading them up with large volumes of business.
Snowdon explains: “The ‘big bang’ approach to launching a new brand is a high-risk strategy. It may generate a flurry of publicity at the time of the launch, but that is quickly forgotten if service standards fail under the onslaught of new business. Brokers have long memories and if their initial experience is marred by poor service, slow response times and frustration for their clients, they will understandably be reluctant to try you again in the future, especially with so many other lenders vying for their business.”
It is typical that Snowdon waited a full year before recruiting the company’s first business development manager (BDM). He explains: “My priority in the early days was recruiting, training and testing underwriters and administrators. I have seen too many lenders fall over in terms of service quality and did not want Freedom Lending to go down the same route. We have only recently started to build our sales team, safe in the knowledge that the business is capable of handling the business they generate.” Freedom now has five BDM’s and will grow the team to 10, plus a key relationship manager, over the coming months.
Packager focus
To date, Freedom Lending has focused on generating business via key relationships with leading distributors and packagers. The company has positioned itself in the specialist prime market, with a range of mortgage products which includes self-certification, buy-to-let (BTL), let-to-buy and full status mortgages. Freedom Lending also has a range of non-conforming products and launched its innovative ‘On Track’ credit repair range last year, which rewards borrowers who keep up-to-date with their mortgage payments, with regular rate reductions.
All of Freedom Lending’s products have been carefully developed to address issues which most other lenders have left unanswered, such as restrictive income multiples, non-conforming products that do not reward borrowers for maintaining a good payment record, de-personalised underwriting, inadequate loan-to-values (LTVs), higher lending charges (HLCs) being imposed on prime mortgages and interest rates linked to LIBOR, which few borrowers understand.
Affordability is key
One of the key features of the Freedom Lending product range is the use of an affordability calculation. Rather than using traditional income multiples, Freedom uses an affordability calculation that takes into consideration borrowers other financial commitments, as well as their salary. This means that borrowers who do not have significant other debts can usually borrow more than the normal 3.5 plus one income multiple will allow.
Snowdon believes that what differentiates Freedom’s affordability calculation from those of its competitors is its transparency and ease of use. “Unfortunately, there is not an industry standard when it comes to affordability calculations and most lenders have adopted subtly different approaches, which is very confusing for both intermediaries and borrowers. We have not gone for a ‘black box’ approach in which it is impossible to understand how the calculation works, preferring instead an easy to understand and fully transparent formula. It is just as easy to work out as income multiples. Feedback from brokers has been excellent.”
Self-cert cornerstone
Self-certification has been a cornerstone of Freedom’s product offering from the day it launched and Snowdon prides himself on being one of the pioneers of this market, having made self-cert a key product offering for both TMB and Verso. Snowdon observes: “Self-cert has been maligned in the recent past, but my experience has always been that, if self-cert is sold correctly and underwritten diligently, then there will be no problem with credit quality. Indeed, I know from experience that self-cert portfolios need present no greater risk than full status business.”
Future
What of the future for Freedom Lending, as it faces competition from a new wave of lenders entering the market? “The future is going to be challenging, but Freedom Lending is well-placed to capitalise on the market opportunities. We also have a three year head start on those businesses that are just opening their doors for business. This is a significant competitive advantage” reflects Snowdon.
Freedom Lending has quickly made the transition from being a plan on paper to being a credible alternative to the many other mortgage lenders promoting their wares. Most importantly, Freedom Lending has placed the highest priority on ensuring intermediaries receive a consistently high quality and personal service – a priority which Snowdon intends to maintain at the top of his list.
If you would like to find out more about Freedom Lending’s products and services, you can either phone 0845 8 505 123 or visit the company’s website at www.freedomlending.co.uk
