Earning Potential

For Introducers referring Secured Loans to a Master Broker

When proactively contacting mortgage brokers, IFA’s and other introducers, business development managers working for secured loan master brokers are often met with a less than enthusiastic attitude towards their product offerings. Often, introducers are not familiar with the potential advantages of a secured loan, are unaware of the income potential for them, are understandably only familiar and comfortable with mortgage products or even view the secured loan as a ‘second-class’ product.

In today’s challenging environment, any introducer who does not have a secured loan in mind when considering options is missing opportunities to help clients and earn a significant income stream.

Some of the advantages of considering a secured loan as a solution can be summarised as follows:

• All types of customer can be accommodated from those on benefits and pensions to high earners
• Any reasonable and legal purpose of loan
• All property types considered
• Terms from 3 years to 30 years – no need to re-finance whole mortgage balance over another 25 years at higher rate than existing mortgage
• Allows client to keep low-rate prime high street mortgage if they have experienced recent credit problems
• Loans from £5,000 to £150,000
• No income multiple calculations
• All loans (except those for business purposes) now regulated under the CCA – maximum early redemption penalty is two months interest
• Loans made behind sub-prime 1st mortgages and to adverse credit borrowers

So, it can be seen immediately that there must be clients of most introducers for whom a secured loan should certainly be considered and may be the best solution.

In terms of income and workload for introducers, a secured loan solution can be very lucrative and need not involve much work by the introducer. Taking the model of master broker Magic Loans, based in Sale, Greater Manchester as an example, the process works as follows:

• Introducer registers with Magic Loans – this can be done entirely by email – the introducer supplies a registration form, bank details for payments and a copy of their consumer credit licence. Also, the introducer specifies which of the products offered by Magic Loans can be sold on the introducer’s behalf. The introducer is also sent terms and conditions of the relationship and a copy of the brokers Treating Customers Fairly statement
• Once registered, applications are submitted on-line by the introducer who specifies if they want the customer contacted directly by Magic Loans or if they want a ‘quick-quote’ to discuss with the client themselves
• Magic Loans then pick-up the processing of the customer and conduct a fully compliant, regulated sales process. The customer receives the best product for which they qualify. The loan is packaged by Magic Loans and then sent to the lender for completion. Lenders then pay the broker, usually within two weeks of the loan completion.
• Introducer earnings are disbursed weekly by Magic Loans by BACS transfer

Throughout the above process (which takes around 25 days on average due to all loans being regulated and having two eight-day cooling off periods), the introducer can see the progress of their deals via an on-line internet tracker – they are given a unique user name and password and can log-in anytime and see all the relevant notes made by the Magic team regarding the case – conversations with the client, valuers, lenders etc. It really is very labour-free for the introducer. In addition, the client does not have to pay application fees or anything for valuations or legal costs.

Saving the best until last, the income earned by introducers using Magic Loans in 2007 equated to just below 5% of the net loan amount (around £1,400 per completed case). Magic believe in the model whereby the earnings on the loan from commission and broker fees are shared equally between Magic Loans and the Introducer rather than paying a fixed % of the net loan – this often turns out to be inequitable for one party or the other.

In conclusion, with these advantages and rewards available, it’s hard to see how any introducer can afford to ignore secured loans as an option when advising clients.

You can see Magic Loans Introducer site at www.magicintroducer.co.uk