Promoting Second Charges

There’s a shared consensus in the second charge market that more needs to be done to promote the products on offer, both to mortgage brokers and to consumers. Ironically the main beneficiaries of such promotion are likely to be mortgage brokers yet a large percentage of the mortgage market has still not got to grips with second charges since MCD came into effect. The market has yet to reach anywhere near its potential and so it’s widely agreed that more promotion is needed.

Perhaps what isn’t agreed upon however is the best way to do this. Back in the day of course TV and press advertising was the obvious option. Daytime TV was awash with adverts for so called ‘homeowner loans’ and calls to consolidate debts. And this was certainly an effective approach which raised the profile and availability of secured loans.

These days however, things are a little different.

Understanding Market Rates & Repayment Terms

Now that we operate within a more regulated environment, advertising becomes a little more difficult. I’m sure everyone remembers that well used line “Consolidate your debts into one convenient monthly payment”. Consider then the caveats that would need to be added to this in the interests of protecting vulnerable customers and adhering to new regulation. Coming up with a ‘call to action’ tagline is not as easy as it once was.

Then there is the matter of finding a target audience. If we’re promoting loans to the homeowner who wants to keep their current mortgage we’re not talking about a huge number of people. How do we reach those people in particular?

Of course, the financials of second charges have taken a big hit too. The bulk of the profit in times gone by was made on PPI sales. I don’t need to tell you that that is no longer the case!

Let’s not forget too that the sales process itself can put off some consumers. In the past they could get some meaningful personalised information upon which to decide if they wanted to proceed. Now an elongated sales process is involved which customers don’t always want.

Key Criteria & Application Guidance

So are master brokers prepared to cough up for expensive advertising campaigns knowing they’ll attract less business than they would have done in the past due to a toned down advertisement and, for the cases they do get, they’ll receive less cash, more liability and a more costly advice process? It’s a brave man who’s willing to take that chance.

The ironic thing is the product is actually better than it has ever been but now consumers are less aware of them. Rates are lower than ever. Early repayment charges are low to non-existent and the sales process ensures the consumer gets the right product for them.

If advertising direct to consumers is not as easy – or as productive – as it once was it’s of little surprise that, with no direct promotion whatsoever, the comparison websites are hoovering up secured loan customers. With the search engine power and brand recognition of the comparison sites they don’t need to promote second charges or engage in pay per click advertising to rank top of page one. Of course such customers may not be looking for or aware of second charge loans but once they tick the homeowner box they are probably on the journey whether they like it or not.

Lending Considerations & Next Steps

So, unlike the past, virtually no one is promoting the features and benefits of second charge secured loans. The closest we get are the few brave souls who engage in pay per click advertising or fringe TV channels. And so, once again, we turn to the mortgage broker market. Brokers are exposed to a massive opportunity and have the ability to converse with the exact target market for second charges. By doing so and spreading the word they’ll benefit not just the wider market but their own businesses too.

It’s obvious that the wider your offering the more lucrative your business will be. Clients who come to you for a second charge may actually be better suited to a remortgage and vice versa. If you offer both, even on a referral basis you get paid either way. Yet many brokers are currently losing clients who are turning to ‘one stop shops’ in the form of comparison sites simply because they don’t know their broker can offer secured loans.

Lending Considerations & Next Steps

What is it that makes comparison sites so attractive to consumers? What messages do they convey to potential customers? Simply a) that they can save you money and b) that they can save you time. In reality neither is probably true and the comparison site will pass the lead to a favoured specialist demanding a large fee in return, which the customer ultimately ends up paying. Brokers with a diverse offering can undercut comparison sites on fees and offer a whole market first and second charge comparison. Really; why wouldn’t you? Just ensure your clients and potential clients understand and are exposed to everything you can offer. Each element of your offering will bring in its own business.

www.promisemoney.co.uk

Latest Articles

Intermediary Guidance for Promoting Second Charge Loans

Structuring competitive terms on promoting second charge loans for your clients requires direct access to specialist underwriters. In addition, our intermediary lending desk works directly with over 90 specialist lenders across the UK.

Consequently, partnering with Promise Money ensures whole-of-market broker access, transparent procuration fees, and rapid decisions in principle for your client cases.

Specialist Underwriting & Whole-of-Market Access

Because specialist lending facilities require bespoke underwriting, comparing lenders across the UK is essential. Explore our complete guide to Specialist Lending Desk to understand how different lending criteria apply to your requirements.

Promise Money is an independent credit broker authorised and regulated by the Financial Conduct Authority (FRN 681423). Our experienced team reviews your specific circumstances to secure optimal terms across 90+ UK lenders.