Paragon must change to become competitive again

From Peter Wellingham

As a specialist buy-to-let adviser also directly authorised by the Financial Services Authority, we are a long- standing user of Paragon for a number of our clients. Indeed, we have promoted its products heavily to our professional landlord clients in the past.

Our reasons for recommending it have included that it will look at properties other lenders would not, HMOs for example, as well as give forward buying facilities.

Furthermore, our BDMs from Paragon have been extremely professional and helpful in their advice.

But now we are in a new chapter. Other lenders have relaxed their attitude toward HMOs and will accept mortgages on some of them. Other lenders take the view that if somebody has a good credit rating and is an experienced landlord, their documentation requirements are light – provided the property is self-financing with appropriate cover. Other lenders give their best rates to existing, loyal customers as well as making special promotions to the new. Other lenders recognise that it is a competitive world and pay fees for further advances.

Paragon, in contrast, has not changed. John Heron has been urged on many occasions to slim the weighty submission pack of documentation for professional landlords that all brokers I know regard as over the top.

He has consistently refused to relax these constraints. Remember, these are mortgages for professional landlords with at least three years’ experience and at least three properties – but usually many many more – in their portfolios. And a facility for only five months is granted before refreshing the documents all over again. Don’t we have enough bureaucracy in the mortgage business?

The ‘only available for new borrowers’ syndrome has also infuriated me recently as I personally came out of several deals with Paragon to be faced with higher rates than I was selling to new clients – or existing clients with new properties – but despite arguing the case with some force, there has been no movement.

Now a combination of mistakes in processing plus refusing to pay brokers a standard fee for significant further advances of, say, 400,000 while agreeing to the client’s facility increasing from 4m to 5m has tipped the balance for us.

So, no more submissions to Paragon until it changes its uncompetitive strategy. My own mortgages will move and so will those of my clients – including further advances – in the competitive market out there.

One HMO remortgage arising recently means the client getting a better deal from a lifetime tracker than Paragon’s best LIBOR tracker, and we get paid 1,650 (which would have been nothing from Paragon despite even more broker work for the privilege of giving Paragon the business).

Paragon’s people are generally good but its product offering must improve.

I look forward to doing more business with Paragon but only when it has conducted a thorough review and brought its commercial policies up-to-date so it can become competitive once more. No doubt other brokers will do the same.