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Opinion: Where is the second charge big bang?


Here we are at the end of another year, and while there are plenty of positives we can pick out from 2017 one fact remains undisputed – the big bang moment where mortgage brokers suddenly catch on to second charges hasn’t happened.

Many brokers have made the transition without difficulty but it’s understandable why others are so busy that they just focus on their core activities and don’t have time to step outside their comfort zone. This applies to many additional products and services they could offer – not just second charges.

I would liken that comfort zone it to being inside a very fast car or train – everything inside is calm and in control. Outside, the world is flying by fast – it’s a blur. We shouldn’t be surprised that many brokers want to stick to familiar territory and are reticent about stepping outside.

In the past, selling additional protection products may have seemed like a non core activity for some brokers but now they are being asked to embrace second charges which, as far as they are concerned, are from another planet

Given secured loans were historically viewed by many brokers as an alien product we shouldn’t be surprised if some feel like they have just upgraded from a fast train to the Starship Enterprise. Travelling at warp factor nine, the outside world is even more blurred. Getting off, and back on again, is even more challenging.

No wonder they prefer to stay on the bridge of the Enterprise and boldly go where they have been many times before – to the residential mortgage market. So whilst we can encourage brokers to step outside their comfort zone, don’t be surprised to hear some screaming those immortal words “I canna tek any more captain”.

But by staying where it seems safe you’re missing a huge opportunity. The market is on a growth trajectory that will only continue. This year saw six consecutive months of growth in second charge mortgage new business volumes, dropping just slightly in September in line with the rest of the housing market. Also it may not be as safe as you think if your business is not fully aligned to FCA rules and guidance.

Ignoring this sector is highly illogical.

So how do we help brokers take that step into the unknown? And do so without causing too much upheaval to their core business or stepping to far in to the unknown?

As master brokers or packagers, our job is to make it as easy as possible for inexperienced brokers to teleport into our world, do what needs to be done in as little time as possible, and then return to the environment they know and like.

The market is doing a lot to educate brokers on what they should be doing – especially in regard to second charges. There’s definitely a greater awareness and from conversations I’m having brokers are clearly becoming more switched on to the uses of seconds. Similarly brokers know that bridging, commercial or specialist mortgage products might be available for their clients.

The challenge for many is actually a very simple step of getting that case from their pending pile to the inbox of a specialist they can trust.

Master brokers and packagers must make it a priority in 2018 to connect with brokers, build relationships and demonstrate the role they can play. It’s not just about educating brokers on the benefits of seconds, it’s about highlighting the simple and straightforward sales processes available to them via packagers and the options they have. It seems to me that it’s this, rather than a lack of understanding of the benefits of secured loans, that is putting brokers off.

Another interesting niche is forming in the specialist lending market – DIY developing. In the past development finance was generally unavailable to inexperienced developers or for small projects. Now, new regulated products are coming to market which are specifically aimed at those DIY developers who want to build a house in their back garden and sell it. Similarly it’s available to those who are inexperienced in property development but want to step in to the sector with the help of an experienced builder.

It’s news to no one that we’re in the midst of a housing crisis and more houses are needed whether that be hundreds on a huge estate by a well known developer or one or two by a bespoke firm – every little helps!

Ground up developments including self build, barn conversions and basement excavations can all be financed with a regulated loan and getting planning consent to build at the end of the garden has probably never been easier.

And if you move in to the new house there should be no CGT or income tax to pay as it’s your client’s primary residence.

If you have any clients who fancy themselves as a DIY developer, this is the one for them, and there are lenders willing to help.

Steve Walker is managing director of Promise Specialist Lending



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  • John Crescens 5th December 2017 at 5:23 pm

    Great article,regrettably whilst secured, lending has been around since the late 1960’s it has always suffered an image problem .This despite the many valiant efforts of brokers ,lenders and industry appoint regulators. The ability to assess ,underwrite and decide virtually instantaneously appears lost on many .Keep on banging the drum and eventually the industry will sit up take notice and listen.