It always seems odd that individuals should show such delight when they secure their mortgage. For people that have agreed to take on hundreds of thousands of pounds worth of debt, which will take them 25 years to pay off, it seems unfeasible that joy should be their first reaction when the papers are finally signed and the deal is completed. Yet, more often than not, these debtors will celebrate with champagne and arrange a house-warming party at their newly acquired premises, tilting them further into the red in the process. However odd it may seem, it is this happiness that mortgage advisers should take advantage off when dealing with their clients.
There is no doubt that the unadulterated joy is generated by the ownership of property and that scrambling on to the property ladder is a milestone in anyone’s life. Any mortgage adviser that has done a good job for their client, made the process as easy as possible, got them the best deal available and left them happy in their new home should be looking to further that relationship where they can.
Prolonging the relationship
Traditionally this has been done by jotting a note in the diary as to when the deal they are on runs out and contacting them in due course as to the possibilities of remortgaging. Intermittently there may also be letters sent or phone calls made about withdrawing equity. However neither of these seems to be delivering the kind of financial service that clients would most benefit from or which are likely to prolong the relationship much after the initial mortgage has been sorted out.
In many instances, remortgaging will not save a huge amount of money from the monthly payments that are already being made and can seem like too much trouble to bother with. In other circumstances, the client will have forgotten all of the goodwill they initially felt towards their mortgage broker and simply go with another recommendation they have or look to find a competitor online when the time comes.
Maintaining and refuelling the level of business that comes from an existing database of clients has always been one of the major struggles facing mortgage intermediaries and there is no reason and certainly little evidence to assume that this has changed over the years.
Given that it is unlikely that clients will change their behaviour, it is up to mortgage brokers to change their own behaviour and ensure that they can develop a relationship with clients that will see them past the initial euphoria of completing on their house purchase.
Insurance is key
How to do this effectively is the key question on everybody’s lips. The answer seems to lie in the surround products which can be sold and are renewable on a more regular basis than remortgaging or equity withdrawal can offer. In short, insurance.
Whether mortgage brokers see general insurance as being out with their remit, not something they wish to deal in, overly complicated and finicky or simply just something they have never considered is uncertain. What is certain is that by selling it effectively, mortgage advisers should be able to garner new business and cement the relationship they have with their clients for the future.
There is no shortage of insurance products that an intermediary can provide on the back of a mortgage, and once the door is open the wider gamut of insurance products can be sold equally as easily to clients, providing them with a one-shop-stop for their mortgage and general insurance needs.
The obvious insurance sold alongside a mortgage is protection insurance to safeguard the monthly payments being made. Whether this takes the form of a mortgage payment protection insurance (MPPI) policy or an income protection policy will depend on individual circumstances, but there is no doubt there is a need for it in a market where prices are rising, borrowers are being increasingly stretched to meet their mortgage and the smallest of hiccups will create real problems for many borrowers in the market.
Offering opportunities
Although the protection industry may not be going through one of its finest hours at the moment, there are still a large number of good value products available that will cater for clients in their time of need. Many new homeowners will also be looking to take out life or term insurance policies, especially if they are a newly married couple moving in to their first family home. Buildings and contents insurance is another possibility and is too often simply taken out through the provider of the mortgage without other options being explored by either the client or broker.
These products all offer mortgage brokers the opportunity to have more in-depth conversations with their clients about the financial needs they have and once some of the mortgage-related insurances have been put in place, there is no reason why the scope cannot be widened to other products.
Clearly developing such a scope is not easy and certainly not all clients will sort out all of their insurance needs in this way. However, for mortgage brokers, the opportunity does exist to become regulated for general insurance products and really investigate how this could in turn develop their business and improve the relationship they have with their clients.
We offer an exam called the Certificate in Regulated General Insurance (CeRGI), which gives advisers the technical knowledge they need to operate on this wider basis. It may not pay dividends immediately and it may prove difficult to really develop the scope of services being provided for clients on an ongoing basis. However one thing is for certain, the goodwill that clients have for their brokers does not last forever and surely if nothing is ventured, then nothing will be gained.
