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Secured loans in the ascedancy

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Secured loans in the ascedancy

By Steve Walker, Managing Director of Promise Solutions

It would be fair to suggest that, despite the restricted mortgage market, and significant earning potential, most mortgage brokers have been slow to adopt secured loans as a core product. But a series of events have prompted many of those mortgage brokers, previously dabbling or sitting on the fence, to now play catch up on the proactive brokers who have enjoyed the benefits of loans for some time.

Secured loans have for some time provided a viable and profitable alternative to a remortgage, especially where borrowers are tied into their existing mortgage or their circumstances rule out a mortgage. Secured loans have remained available to borrowers with varying degrees of adverse credit, the self employed without accounts/income reference plus a range of income stretch and high LTV products. But the loan market is changing again with offers of better things to come. In recent weeks Promise have introduced 90% LTV lending, third charge loans and more recently a 2% reduction in interest rates courtesy of Link Loans. Looking forward, rumours abound regarding the return of Kensington to the secured loan market as well as 4 other lenders confidentially telling us they will join the market shortly. With the loans market innovating and developing faster than the mortgage sector, plus average introductory commissions around £1200, secured loans are even harder for mortgage intermediaries to overlook. By choosing the right master broker, with substance, experience and the necessary tools, it is easy for less experienced brokers to integrate secured loans into their business, in what ever manner they decide.

Ignoring for a moment the obvious commercial drivers, regulation and TCF is now also pushing brokers harder than ever to offer secured loans. With the FSA confirming that they will regulate secured loans, it seems clear that the rules may change around the loan process with mortgage brokers required to consider loans, in more detail, as part of the advice process and to demonstrate they have done so. But this is good news for the professional intermediary who already applies TCF principles and has appropriate processes in place. Whilst the products may differ, the need for quality advice remains and brokers should be mindful of our increasingly litigious society and the PPI debacle which has ensued. Such claims companies will eventually exhaust the current bandwagon and brokers should consider today if their processes will stand up to scrutiny by FOS tomorrow. Thankfully accurate specialist loan sourcing systems dovetail in to the current sales process allowing brokers to demonstrate they considered a loan and why it was discounted, or offered, as an option.

Compared to mortgages, secured loans are certainly in the ascendancy. With the potential to earn high commissions on remortgage turndowns plus technology to help demonstrate the offering of complete advice, more brokers than ever are taking the opportunity to properly integrate secured loans and enjoy the financial rewards as well as piece of mind.

Call the Promise Team on 01902 378021 for further information.

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