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Brokers need to diversify

Brokers need to diversify

Recent research conducted by Legal and General Mortgage Club has revealed that over 80% of brokers will look to diversify their business models and income streams over the coming months as shifting market landscapes and emerging technologies combine to place an increasing onus on the benefits of offering broader ranges of financial services.

The downturn in previously secure markets (such as buy-to-let or first-time residential property sales), as well as the perceived threat of robo-advice and other cyber-innovations, are cited by many brokers as evidence of a need to expand their products and services. Indeed, industry experts have been recommending diversification as a means of ‘future proofing’ businesses from the impact of as yet undetected factors.

Furthermore, of course, evolving expectations as to the remit of customer service and the increasingly widespread belief that financial needs could (and should) be catered ‘under one roof’, offer a compelling argument for expanding horizons and product ranges (especially if they relate to core businesses).

By developing knowledge and awareness of specialist products that fall outside of traditional areas of business (such as second charge mortgages, bridging loans and the like), brokers can make better informed decisions for clients and look to build longer term relations with their custom bases. Moreover, repeat custom that is predicated on multiple services and strong foundations of trust can yield wider sources of revenue and offer better chances of growth.

Many brokers have become accustomed to selling insurance products alongside mortgages, so a similar ‘shift’ towards specialist products that reflect changing needs and circumstances shouldn’t be too much of a leap- just look at the surge in second charge mortgages over 2017 and the similar growth in bridging loan business (with 65% of brokers reporting increases in loan volumes for Q3 2017).

And, if this seems like a step too far at the present time, then brokers can consider partnering with businesses that do offer specialist products. Either way, with uncertain political and economic factors presenting their own challenges, more and more brokers are beginning to realise that they need to be jack of all trades, master of SOME to survive.

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2 out of 3 borrowers get a lower rate than our representative example of a regulated secured loan below:

Mortgages and Remortgages

Representative example

£80,000 over 240 months at an APRC OF 4.3% and a discounted variable annual interest rate for two years of 2.12% at £408.99 per month followed by 36 payments of £475.59 and 180 payments of £509.44. The total charge for credit is £39,873 which includes a £995 broker / processing fee and £125 application fee. Total repayable £119,873.

Secured / Second Charge Loans

Representative example

£63,000 over 228 months at an APRC OF 6.1% and an annual interest rate of 5.39% (Fixed for five years – variable thereafter) would be £463.09 per month, total charge for credit is £42,584.52 which includes a £2,690 broker / processing fee. Total repayable £105,584.52.

Unsecured Loans

Representative example

£4,000 over 36 months at an APR OF 49.9% (fixed) and an annual interest rate of 49.9% would be £216.21, total charge for credit is £3,783.56. Total repayable £7,783.56.


THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME

REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.


If you have been introduced to Promise Money by a third party / affiliate, Promise may pay them a share of any fees or commission it earns. Written terms available on request. Loans are subject to affordability status and available to UK residents aged 18 or over. Promise Money is a trading style of Promise Solutions Ltd. Promise Solutions is a broker offering products which represent the whole of the specialist second mortgage market and is authorised and regulated by the Financial Conduct Authority – Number 681423.

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