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

90% of professionals believe master brokers convert more business

90% of professionals believe master brokers convert more business

A lack of awareness surrounding second charge loans makes master brokers’ knowledge “essential” when converting business, according to Mark Fry, managing director at CSC Loans.

Mark’s comments followed a poll conducted by Loan Talk, which found that 90% of respondents believed that master brokers convert more business than brokers going direct. 

“If you look at most direct-to-consumer mortgage broker websites, very few even mention second charges,” Mark explained.

“This would suggest a lack of knowledge or confidence in this market, meaning that the services of a specialist master broker are essential to remain compliant.

“Master brokers should be able to provide brokers with a European standardised information sheet and the relevant evidence of research to enable a broker to ascertain whether a remortgage or second charge is the most appropriate option.”

Steve Pollard, head of sales at Smart Money, concurred with Mark, arguing that the complexity of the second charge sector meant that some brokers could lack the necessary knowledge.

“Mortgage Credit Directive (MCD) may have aligned first and second charges, but there remain some intricacies between the two markets, hence the reason that advisers have to choose the scope of their advice.

“Secured loans, as was, have been the bread and butter of master brokers for years and while sourcing systems are a fairly new innovation for this sector, which I’m sure traditional mortgage brokers can familiarise themselves with, understanding these intricacies of a second charge takes experience as well.

“For instance, how many mortgage brokers will have requested consent before or come across a Deed of Postponement alongside consent?”

Last month, The Loans Engine scrapped its master broker fee in a bid to simplify the second charge market for new entrants, along with a number of other master brokers which have revaluated their fee structures.

Despite these changes, Steve claimed that MCD had already succeeded in boosting second charge sales.

“Since MCD, we’ve offered our introducers the choice of either referring to us with our advice, or using our research with their advice and we’ve actually seen business volumes increase as a result, with brokers enjoying the options we make available to them.”

In July, master broker Enterprise Finance revealed that MCD had resulted in a better application to completion conversion rate.

Sam Kirtikar, managing director at Clever Lending, insisted that master brokers had a whole range of advantages over brokers going direct to consumer.

“A master broker can provide an intermediary with the exact service that they require.

“Whether directly authorised or not, we can take as little or as much work away from the introducer as they require, by completely looking after the client and offering the full advice, or simply by packaging the product that the introducer has recommended.

“In a nutshell, we have more strings to our bow across a wider range of products and can help with more types of cases, from straightforward to complex, to help brokers and lenders complete cases.”

And with brokers benefitting from 50% of all net generated income from Clever Lending, Sam predicted that master brokers could only grow in popularity.

“Effectively, the introducer can earn extra income, while the client gets a far wider selection of products.

“As a bonus, the introducer needn’t have to add extra strain to their already busy lives, by learning the thousands of extra options.

“I'm confident the role of the master broker is not only here to stay, but will continue to grow and become the preferred option for most brokers.”

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