Am I wrong?

A good proportion of UK consumers will want to raise capital but talk themselves out of it – just like this:

• I don’t want to mess with my mortgage
• The banks are not really lending to people like me
• I probably won’t get the rates, term, amount I am after.
• The last time I did this it wasn’t a great deal when I repaid the loan.
• It’s too much hassle – who would I go to who I can trust?

Most consumers probably still think secondary lending is restricted.

They don’t know – They can raise competitive secondary finance without affecting their mortgage on their main residence or on BTL’s.

They don’t know – Products abound for complex income scenarios, poor credit, self employed with flexible manual underwriting. Yes is more common than No.

Lending Myth: There is massive choice – Loans from £10,000 to £3 million, rates from 4%, repayment terms from 3 to 30 years , fixed, tracker etc etc

Settlement Facts: Settling early is far cheaper as ERC’s and lender fees are often nil and there are no added features like PPI

Understanding Market Rates & Repayment Terms

Regulatory Duty: You can arrange everything & ensure any loan offered is suitable & in their best interests – regulations demand it.

Here’s the thing – the latent demand must be huge:

Consumers bought boat loads of secured loans from direct lenders and big brokers when the products were “bad” (rates from 7.9%, high ERC’s, PPI virtually every time, questionable sales tactics) the market was huge from the mid 1990’s to the late 2000’s.

Now second charges are significantly cheaper, more transparent and easier to exit. So why don’t UK consumers buy even bigger boat loads of them now?

The answer is because they are not promoted – rarely on TV, never in the press and often a last resort for mortgage brokers.

So, if the products are better than in the past the demand should be even stronger. But no one is promoting seconds

That’s got to be an opportunity.

Key Criteria & Application Guidance

1. Primary Factor: Every second charge enquiry is a potential remortgage – brokers could promote seconds to generate 1st charge enquiries – seems obvious.
2. Second Element: UK consumers don’t really know how good second charges are now – if they did surely they would be even keener than before
3. Third Aspect: The advertising of second and first charges is now under the same rules – that must make it easier for brokers to incorporate seconds into their promotions.
4. Additional Point: The sales process is identical to a mortgage – offering a first or second to anyone who enquires is easier – OK big tick in that box
5. Fifth Consideration: The income potential on seconds is really good, every enquiry is a future remortgage.
6. Sixth Criterion: With second charges brokers can do less work than on a mortgage if they choose the right partner.

My closing thoughts

• Primary Factor: I wish I had spent the last 10 years building a referral network and client bank of first mortgage customers.
• Second Element: I would be promoting second charges to build my business as quickly as possible before the rest of the mortgage industry jumps on the band wagon.
• Third Aspect: I would partner with a company I can trust (like Promise Specialist Lending) to help make it happen & to look after my clients properly.

Lending Considerations & Next Steps

Not everyone will agree with my thoughts on this – That’s a given.

But many brokers will successfully use second charges to generate extra new enquiries, incremental income and build the value of their client bank.

Some will make second charges an integral part of their business to support them through future down turns in other core activities.

In short, seconds will make them more money and their business stronger.

Lending Considerations & Next Steps

Of course there will be others, who are well intentioned, but just don’t get around to doing anything about it – it happens. How many times have I heard or said myself “I wish I had done that years ago”?

What does it mean for you?

If, like me, you think second charges can have a positive impact on your business, Promise is here to help – we have the systems and tools.

Whether you already promote / offer second charges or you just want to get started, Promise is here to help – lean on our expertise – lets grow together.

Our second charge proposition is backed by 30 years expertise in the sector and has been built to help brokers move from doing an occasional second charge to making seconds a cornerstone of their business.

Our lender panel is the largest you will find.

www.promisemoney.co.uk

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