To advise or not to advise?
Advise or not to advise?
That seems to have been a key question for mortgage brokers in 2016 deciding whether or not to advise on second charge loans themselves or to refer clients to a master broker instead.
Worryingly however there seems to be a third option in play and that is ‘doing a bit of both’. Ok I’m being facetious, I’m sure brokers don’t knowingly choose this approach but there are certainly a number of mortgage brokers out there who risk blurring the lines in a couple of ways and consequently getting it wrong.
Dipping in and out of seconds on an ad hoc basis is certainly going on. By this I mean offering a second charge on an inconsistent basis – maybe as an after thought. Brokers should be clear on their scope of services and have processes and documentation to make it obvious to their clients. Options could include considering a second charge every time or simply opting out of seconds altogether. Either way every client should be offered the same range of services and the business must decide what those services are and have a process to deliver them consistently. Offering a second charge only to those who ask for it, or most obviously need it, falls well short of being consistent.
Secondly in a referral scenario some brokers have difficulty in relinquishing the advice and can try to over rule the chosen loan. I understand this and it demonstrates the broker’s commitment to their client. However, if the advice is being taken on by a loan specialist, beware getting involved or overly influencing the chosen product. The loan broker must give advice in accordance with its fact find and will be on the hook for the suitability. By all means provide background to the case to help them identify all the key points but ultimately they must give the advice. If you disagree it suggests that their facts differ from yours which points to mixed messages from the client or a poor fact find somewhere along the way. Between the parties get the facts right and the chances are you will come to the same conclusion.
Be clear in your scope, say what you do and do what you say. Lack of clarity or blurring the lines can only lead to problems later.
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Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status. We may receive commissions that will vary depending on the lender, product, or other permissable factors. The nature of any commission will be confirmed to you before you proceed.
More than 50% of borrowers receive offers better than our representative examples
The %APR rate you will be offered is dependent on your personal circumstances.
Mortgages and Remortgages
Representative example
Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66
Secured / Second Charge Loans
Representative example
Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20
Unsecured Loans
Representative example
Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.
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.
Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG
Authorised and regulated by the Financial Conduct Authority – Number 681423The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages
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