With just a few months before the FCA issues its guidelines surrounding the forthcoming regulation of the secured loan industry, mortgage brokers will have to be clued-up and ready to accept the changes too.
Secured loans and mortgages will soon be treated in much the same way come April 2014 and although none of us know what the changes will be, few would doubt that the FCA will look dimly on brokers who do not investigate the cost of topping-up a client’s existing mortgage with a secured loan, where they would normally carry out a remortgage as a matter of course.
Users of our miLoan sourcing system already have access to the tools which help them to make the correct funding decision for their client and keep one step ahead of the competition. Once they’ve decided whether a secured loan or remortgage is the best option, the system will produce a PDF or Word ‘Product Suitability’ certificate for the client and the file.
For clients who have a low-rate mortgage deal or an interest-only arrangement, it would almost always be cheaper to leave their current set-up in place and arrange a secured loan for the extra funds required. We know this because our systems check the cost of the five cheapest remortgages for every secured loan application we receive using the latest technology innovations that are leading the field, developed in-house.
In 75% of the cases we received in August, the savings for keeping an existing mortgage arrangement in place and taking a secured loan instead of a remortgage were in the hundreds or thousands of pounds per month. When the initial mortgage promotion period is over, usually after two or three years, the savings to the client are even higher.
With the balance being tipped in favour of the client in the majority of our new applications and forthcoming regulation, investigating the cost of a secured loan is a must, not an option.
If you would like us to provide information or training to help your understanding of the impact of secured loan regulation on your business, please do get in touch and I will be happy to make the necessary arrangements.
Matt Cottle is director at Y3S Group
