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The Loans Engine makes 'bold' fee structure change

The Loans Engine makes 'bold' fee structure change

Specialist broker The Loans Engine has revealed that it has replaced its all-encompassing master broker fee with an application fee in a bid to attract more first charge mortgage advisers.

From today a new fee of £295 will be collected at the application stage following a decision in principle from the lender, but before The Loans Engine packages the case.

Ryan McGrath, chief executive of The Loans Engine, said: “By changing to an application fee model, we are leading the field in our sector and this is a big, bold, first-adopter move that should sit much more comfortably with those first charge mortgage advisers who might have previously been uncomfortable with the level of fees charged in the seconds market.

“We hope to draw in those mortgage intermediaries who may have felt previously disenfranchised from the sector.”

Intermediaries referring cases to The Loans Engine will also be able to charge the client a fee, enabling advisers, networks and mortgage clubs to control client costs at a sensible level they can justify.

Prior to the Financial Conduct Authority regulation of the second charge market, The Loans Engine could not retain any fee greater than £5 on cancelled applications, resulting in a bundling of costs into one master broker fee.

The firm now hopes that scrapping the master broker fee will minimise and tailor the set-up costs for a second charge mortgage.

Jeremy Duncombe, director of Legal & General Mortgage Club, said: “Scrapping master broker fees is a bold move by The Loans Engine, but one the market certainly needed.

“With reducing rates and charges, there really is no reason for intermediaries not to include second charges as part of their holistic mortgage service to clients.”

Martin Reynolds, chief executive of Simply Biz Mortgage, added: “The second charge mortgage market is currently in the midst of big changes and this will continue for a while as all parts of the distribution chain realign their models.

“Fees have always been a contentious area and it is good to see The Loans Engine taking a bold step and moving to this new model.”

The change was originally announced at Precise Mortgages’ MCD and Second Charge Lending Conference on 7th July. 

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