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

How much value can you eat?

By Jon Sturgess, head of sales, secured lending at Masthaven |

 Last week I watched a marvellously entertaining TV documentary about all-you-can-eat buffet restaurants.


An establishment in Leicester featured heavily and the owner of the deliciously named ‘More’ restaurant told the local press: "It really depicted us brilliantly and honestly. We're a great place to eat and we're great value for money." 

While I relish the concept of all-you-can-eat restaurants, it was the value for money angle that got me thinking: what exactly does value for money mean; does the meaning change for different people and does ‘more’ always equal ‘value’? 
I find that three words beginning with ‘E’ are crucial in the formula for value for money. According to a dictionary* definition: “value for money is based not only on the minimum purchase price (Economy), but also on the maximum Efficiency and Effectiveness of the purchase.” 
I found myself disagreeing with this definition when it comes to second charge mortgages. In my mind, a lender has to ensure their offering is prominent in three key areas: price, service and customer needs. Visualising these factors in three interlinked circles, I see the spot in the middle where they all link as the sweet spot where value for money may lie. 
Within a regulated market, it is a normal assumption that a mortgage adviser would always offer their customer the cheapest product on the market that meets their needs. But here’s where I struggle with the dictionary definition, because price, service and needs will differ every time when it comes to second charge mortgages. What’s right for one customer will vary for another, and in my experience value can sometimes outweigh cost. 
When this happens, value for money is not based on the minimum purchase price, but on the ability of the service to meet a customer’s needs. To put it another way: when the value of something outweighs the cost of something there is a high propensity for a customer to say yes when their needs are being met. 
To give you an example, if a customer requires funds to be obtained within a week and the cheapest lender takes three weeks, then ‘value’ to the customer means having funds in one week; and if this involves paying an additional cost, so be it. They will opt for the lender that can meet their needs in their timeframe, rather than take the cheapest option. 
At Masthaven, we believe the ideal blend is about choices and the customer understanding those choices so they can make a truly informed decision. I suggest the second charge mortgage market has the power to offer unseen value: it is a specialist sector that caters for customer needs, but not in a simple formula of economy, efficiency and effectiveness. Ultimately, I think value for our industry isn’t about giving customers an all-they-can-eat proposition, just because it’s available; it’s about presenting the right menu options so they can choose a little of what they want and more of what they need.

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