2016 – We’ve got a plan so it doesn’t need to be a bumpy ride!
We’ve got a plan
We hope you have had a wonderful Christmas and New Year. We are now back fully staffed and find ourselves in 2016 – the biggest year yet for the second charge market.
As we all know, the MCD is looming and the 21st March 2016 suddenly doesn’t seem as far away and we are all at varying stages of preparedness for this game-changing new regulation, which will mean second charges will fall under the same regime as first charges.
If you are still in a state of limbo as to whether to offer second charges then you really need to decide, fast. Not least because those who don’t choose to advise on seconds will lose the right to call themselves “independent” and “whole of market”. Does anyone want to be in a position to give their customers only half of the answers?
If you have decided and are working towards including second charges in your offering then that’s fantastic. Even if you don’t give advice you can still refer. Here are some proactive steps you can take:
Incorporate second charges into your sales process. This should be simple and Promise can help.
Call Promise and use our second charge referral or packaging solution to help clear cases before the March deadline – any cases which are not paid out by the deadline will need to be underwritten again under the new regime.
Start selling second charges on the advised model as soon as possible if you want to remain independent – this should help with dealing with the pipeline.
Whether you advise or refer second charge loans, take action quickly to benefit from the flexible criteria we are enjoying – from February it’s only going to get tighter.
2 out of 3 borrowers get a lower rate than our representative example of a regulated secured loan below:
Mortgages and Remortgages
£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
£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.
£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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