Advisers continue to be frustrated by high-street restrictions but they have a secret weapon at their disposal – secured loans
Five years after the market collapse and many advisors continue to be frustrated by high street restrictions when looking for suitable refinancing solutions for their clients. In order to fill this gap and ensure their members have access to the very best tools available, more mortgage networks than ever have been out there on the front line, actively forging strategic partnerships with specialist finance providers to ensure they are equipped with all the necessary resources to provide to their members.
And the new secret weapon? Secured loans.
Over the past few months, there’s been an influx in secured loan brokers announcing partnerships with mortgage networks and these collaborations represent a real breakthrough for the secured loan industry.
Secured loans are becoming commonplace in the mortgage market.
Mortgage networks are making sure their members don’t run the risk of losing their clients and are urging them to explore beyond a remortgage and look to a secured loan as a logical extension of their product portfolio.
However, there is a distinct lack of specialist product knowledge and advisors need to understand the opportunities that exist to them within the second charge market. First off, the second charge market is much more accommodating to consumer needs.
With products available to clients with adverse credit problems, sole traders or those wanting to hang on to their current mortgage deal, a secured loan is integral to an IFA’s product offering, especially in the current climate.
Secondly, the second charge lenders are more proactive and over the past 12 months, UK borrowers have benefitted greatly from changes to second charge criteria. With LTV now available up to 95 per cent and loan rates dropping to their lowest level of 5.59 per cent, it’s no surprise more and more networks are taking a closer look at the secured loans market.
Advisors losing out on valuable income
Secured loans can also provide a worthwhile income stream. Many advisors are missing out on lucrative earning opportunities by not offering specialist finance products to their clients. Various secured loan brokers will provide their advisors with a complete range of options where you, the broker, decide the level of control. Meaning that if you do recognise an instance better suited to a secured loan, you can refer your client and generate extra revenue, whilst still being able to concentrate on your main area of business- remortgages.
Level the playing field
Some advisors may be discouraged that when it comes to regulation, the secured loans market does not operate on a level playing field with the mortgage market, but all this is about to change. As of April next year responsibility for the regulation of consumer credit will move to the FCA and will represent a step-change in the way the secured loans industry is governed. Suitability, affordability and transparency, already important under the Office for Fair Trading regime, will become critical to proving that we are treating customers fairly.
Mortgage networks are making every effort to ensure that they partner with a reputable secured loan broker who has taken the necessary steps to ensure they are ready for FCA regulation, giving them the peace of mind that their members are getting the best products and service from a compliant focussed business practice.
With the mainstream mortgage market looking likely to remain flat for some time to come, advisors need to know when a secured loan opportunity presents itself; this is why mortgage clubs and networks are committed to working closely with more specialist product providers to ensure that advisors do understand when a secured loan may be more appropriate option than a remortgage.
The landscape is being reshaped; we need to forge new ways of pushing forward in these turbulent times and this is when the value of strong relationships must not be underestimated. Unity is strength… when there is teamwork and collaboration, wonderful things can be achieved.