Comment: Can DIY match the specialists?

sealey-jonathan

Packagers come at a cost so, if you are familiar with the specialist product area in question, why not go direct?

The bridging market has grown a lot over the past year, despite Brexit, Donald Trump and a falling pound, all of which have left the world in shock.

For brokers who want a bridging loan (or any other form of specialist loan), the default route is to go to a packager or master broker. In doing this, however, they could be costing their clients more than by going direct to a lender.

Since the Mortgage Credit Directive, some second charge lenders have cut out the middleman by setting up direct-to-broker operations. Most bridging lenders have been doing this for years.

Although packagers undoubtedly add value to brokers who deal with specialist loans only infrequently and do not know the products, this does come at a cost. For a lender to be on the panel of a packager, it has to pay, which usually starts at 2 per cent of the gross loan. The lender then needs to recoup that from somewhere and this can take the form of higher interest rates.

The broker too will often receive a lower procuration fee than if they had gone direct.

There is, of course, enough room in the market for everyone; every business fulfils a different need. The amount of help a broker requires will depend on how familiar they are with that product area. Some want or need the help of a third party to take the strain and do the work for them, while others prefer to be in control of the client relationship and put a case together themselves.

The ultimate question is: what is best for the customer? If you can get the best service for your client and best proc fee for your business, and if you know the product area well, why not just go direct?

Jonathan Sealey is chief executive of Hope Capital

Recommended

Mortgage Mole: Fleet of footie

Intrepid Mole, digging up the stories behind the news Fleet of footie Mole takes his hat off to the eagle-eyed reader who realised that Fleet Mortgages’ Bob Young had his very own doppelganger – namely, Stoke City FC manager Mark Hughes. Mole is convinced, but he leaves it to readers to make up their own […]

Knight-Jeff-700x450.jpg

Jeff Knight joins Foundation Home Loans

Foundation Home Loans has appointed Jeff Knight to the newly-created role of director of marketing. Knight has worked for a number of specialist lenders over the past 19 years, most recently Pepper Homeloans, and has also had his own marketing consultancy. He will be responsible for all the specialist buy-to-let lender’s marketing activities and will be […]

A guide to auction finance in 2017

By Matt Tooth, chief commercial officer, LendInvest Over the coming weeks, property auction houses across the country will begin sending out their catalogues to prospective buyers in time for the first auction series of 2017. It’s an exciting time for investors, well aware of the opportunities the properties on the lot sheets offer them and […]

Newsletter

News and expert analysis straight to your inbox

Sign up