A recent story by Mortgage Strategy confirmed that 85 per cent of landlords were unaware of new laws coming into effect next year, which could result in fines for owners of HMOs if they failed to comply.
It is not just landlords whose knowledge may be lacking, however. This applies to an awful lot of borrowers, too.
It does not matter if you are dealing with an inexperienced first-time buyer or a financially sophisticated high-net-worth client; their knowledge of matters relating to mortgages is often a lot less than you think.
I am sure that, for you as brokers, this news comes as no surprise. How many times have you been in a client meeting and had to go back to basics on something you’d assumed they’d be familiar with?
Think about your marketing. Do you make assumptions about the level of your clients’ knowledge that may be unrealistic for some? It is easily done.
We frequently deal with British borrowers working in London for foreign companies, who are paid a bonus in a currency other than sterling. They are often unaware that, if their bonus is taken into consideration when they apply for a mortgage, their loan will be classified as a foreign currency mortgage. A lot of lenders do not offer foreign currency loans.
Likewise, we regularly encounter borrowers who do not appreciate that applying for a loan of more than £1m can place them outside many lenders’ standard criteria.
My point is: never make assumptions about your client’s level of financial knowledge. If you are marketing your services to specific types of borrower, identify the most critical factors and ensure you give them due prominence in your communications activities.
Many borrowers fall into one niche or another. It does not matter if they are HNW customers, landlords, first-time buyers, retired or self-employed, or they have complex incomes. There will almost certainly be factors of which they are totally unaware that could have a big impact on their mortgage. Take nothing for granted.
Peter Izard is business development manager at Investec Private Banking