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Why the broker market remains untapped for Specialist Lenders?

At the time of the credit crunch, over-burdened UK lenders reduced broker procuration fees, which decimated much of the broker and network markets.  Nevertheless, those brokers and networks who had engaged in specialist lending streams continued to stay in business.  Yet broker business remained much lower because brokers did not understand the depth of these lenders and in those days the word niche or bridging lender was looked with scepticism.  The expectation in 2015 is set to be a year of steady growth.  Lending volumes are expected to grow and opportunities will continue to present themselves across the sectors.

However, for most mortgage brokers, specialist lending remains a niche area, that they would rarely think of using for their clients; many consider the rates as too steep, which they say is something most of their clients would stay well away from.  Nevertheless, over recent times, the sector has changed, becoming more competitive, transparent and engaging.  Rates are higher because the Risk can be higher i.e. a building that in not completed is worthless to most purchases as most purchasers want to live in a completed building. 

Today, we consider specialist finance not as a replacement for a mainstream mortgage but a product for specific needs.  Despite its growing profile, some brokers remain unfamiliar with how specialist finance works and when it is appropriate to use.  Perception amongst the general public for direct selling is also limited i.e. if you ask a member of the public do they know what a 2nd charge lender does or a bridging lender they look confused. Again, a lack of profile, general awareness and an unwillingness to consider none conventional finance is a firm driver of this.

Sector experience shows us that brokers are beginning to adapt what they have to offer to suit the changing needs of modern customers' borrowing requirements.  So it isn't a shock that changes in criteria and uses of the products have evolved.  Historically the "small print" had caused many problems for brokers, however, over recent times new lenders have applied a more flexible lending criteria that is completely transparent from beginning to end, in fact many short term and niche lenders have better systems and procedures in place than traditional banks.

Today's mortgage brokers expect:

  • simplicity of process and client information that is consistent in its approach
  • clarity and transparency of fees and terms of the loan
  • quick and easy DIP's (web based)
  • online application process and management including out of hours access
  • quickly generated compliant documents including documents like a key facts illustration and offer letters
  • quick turn-around to a completed loan - some lenders take months to complete a mortgage in this electronic world

Some specialist lenders entering the market have been successful in adopting to change by engaging with technology.  They have carved out a portion of the market place simply by enhancing the broker/client experience on how the lend.  Upfront or on-going investment in technology or systems is generally seen as a secondary consideration, since this expenditure will not necessarily bring in an immediate return on investment.  However, we know from our client's experiences, that those who invested in technology for business improvement, instead of investment for technologies sake, are reaping rewards through reduction in operational costs, time savings and more business because they can operate 24/7.  

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