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Do you expect to see less or more second charge mortgage lenders in 2018?

Second charge mortgages: Leave it to the experts

By Paul Woodworth, Managing Director of Gateway2Finance |

 Second charge mortgages have received a warm welcome into the mortgage sector.

In recent weeks there has been a great deal of focus on the second charge mortgage market with many new entrants, varying business models and plenty of opinions as to how the sector should operate following the implementation of the MCD.

Unfortunately, there has been some negative comments and criticism, a great deal of which is unwarranted. In fact I was at a recent seminar where second charge mortgages where described as a creepy uncle who turns up at family weddings and funerals and now has to be made to feel welcome by other family members.

Much of this criticism comes from those who are new to the sector and are now looking to sell loan products or expanding their packaging proposition to include second charge mortgages. They appear to be positioning themselves as white knights who want to clean up the industry.

In defence of master brokers, I would certainly say that the majority of us have run very ethical businesses over many years and those who refer to the industry in this way are really not helping anyone.

Customer Choice

One thing we must all agree on is that the regulatory changes do allow master brokers, packagers and advisers more flexibility with regards to operating models. This is bound to increase customer choice and it is up to mortgage advisers to decide as to what works best for them.

It was great to see that the results of a recent Legal & General survey which revealed that 84% of brokers planned to include second charge mortgages in their advice process this year with the majority referring to a master broker. This is a major step forward and it will be interesting to see how various models develop in the short term.

Those who choose not to employ the services of a master broker through either the sales or packaging process should not underestimate the complexities involved in the underwriting and administration process, which is I can assure you quite different to packaging first mortgages.

To support this there are a number of propositions coming to market…

Advice and direct to lender propositions.

There are a small number of second charge mortgage lenders who offer a facility for mortgage advisers to go directly to them. Mortgage advisers who go down this road without using the services of a master broker are advising on a much reduced panel and the products provided may not be the most suitable for their client. It is also important that advisers should feel confident that they are competent to give the advice and that they understand the different products offered by a variety of lenders.

I am not averse to mortgage advisers providing advice on second charge mortgages, in fact quite the opposite. I do, however, feel it is important that advisers have the support and direction of industry experts to ensure that they provide customers with a broad choice of products in a fully compliant manner.  

Professional support and guidance

To support those advisers who wish to provide an advisory service or simply refer customers who may require a second charge mortgage, Gateway2Finance can provide access to qualified underwriters who understand the market and have an in-depth knowledge of the lenders criteria and processing requirements.

The aim of delivering the customer with a transparent and wide choice of second charge mortgage options is achieved by the provision of a sourcing system supported by Twenty7Tech, one of the most dependable and accurate systems currently available.

Leave it to the expert

In my experience, the vast majority of sales people want to sell not administer. Sourcing second charge mortgage products or packaging applications may not be an effective use of time when compared to selling a mortgage product, life policy or other financial service.

My advice is to make the most of the expertise available.

Attributed to Paul Woodworth, Managing Director of Gateway2Finance

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