"Make sure you find a packager with a diverse, broad, panel that services all the different sectors of the specialist market. And ensure they don’t charge your clients exorbitant fees."
FR: How will Brexit and the wider economy continue to affect the bridging sector in 2017?
Bridging business is stable for TFC. I don’t see any massive swing either way this year. In the immediate aftermath of the Referendum result last June there was some nervousness in the sector, but it only lasted a couple of months. Now it’s business as usual.
FR: To what extent has technology sparked growth within specialist lending?
What technology has done is made it much easier for advisers to source and process specialist mortgages, but unfortunately this hasn’t yet happened on any great scale, because the big two sourcing firms have not yet developed the level of granularity to make their specialist sourcing as accurate as the new players.
LenderGateway, for example, has 2,000 possible product data points, compared to around 200 for the market leaders. The results are therefore much more accurate.
FR: What advice would you give to brokers who are new to the specialist lending market?
You are not expected to be an expert in every specialist and niche part of the mortgage lending sector. Team up with a reputable packager who deals with complex and specialist cases day in day out, and has strong contacts across the specialist sectors.
Make sure you find a packager with a diverse, broad, panel that services all the different sectors of the specialist market. And ensure they don’t charge your clients exorbitant fees.
FR: Firms in the second charge market are beginning to adopt a flat fee for applications – do you see this becoming the norm and how will it benefit both advisers and the sector?
It was always the case that this would become the norm once seconds came under the same regulatory regime as first charge mortgages. TFC moved to a flat fee structure in November and we now charge £195 on application or £495 on completion on seconds, first charge and buy-to-let deals. A mortgage is a mortgage as far as we are concerned.
Flat fees benefit the client by saving them literally thousands of pounds. That has a clear benefit for advisers, who will see more loyal clients as a result, and also more referrals. A low flat fee gives the adviser scope to charge their own advice fee, in the knowledge that the client is still paying a lot less than the back-end fee option.
Apart from those people with a business interest in high percentage fees on seconds, everyone can see the sense in lower, clearer, flat fees. It’s a no brainer.
FR: If you could see any headline about specialist lending in 2017, what would it be?
‘Brokers must compare second charge mortgages to remortgages when the client is raising capital’
In other words, there is no ‘opt out’ option. You either advise and compare yourself, or you refer to a packager who can do it. At the moment brokers still have the option of saying ‘a second might be suitable but I can’t or won’t help you find out if it is’.
