BestAdvice fires the questions at Lisa Muscroft, head of loan broking, Norton Broker Services.
Best Advice BA: Do you think there are still times when brokers are advising clients to remortgage, when in actual fact, a second charge mortgage might be the more suitable solution?
Lisa Muscroft LM: Yes I do, but that is mainly due to a lack of knowledge and education around second charge mortgage products, not because they are giving bad advice. They are simply taking the route that they are most comfortable with.
There is a lot of misunderstanding in the market around second charge mortgages and the industry needs to do more to educate brokers on the opportunities within the sector.
An obvious example would be when a client’s credit history has worsened or they have some adverse credit. Instead of remortgaging, they could keep a low first charge rate and raise funds with a second charge mortgage instead.
BA: What do you think are the biggest myths about the second charge market?
LM: That the products are only intended for debt consolidation and that they are complex and only serve customers with some sort of adverse credit history.
Another myth is that clients are wary of second charges because of they have high rates and involve a lengthy application process. That isn’t true. The rates on second charge mortgages are extremely competitive and the turnaround time for releasing funds is extremely swift, sometimes only taking days.
BA: What are some of the most popular uses for the second charge mortgages that Norton Finance provides?
LM: I would say that the majority of our second charge mortgages are used for debt consolidation, home improvements or purchasing a caravan or holiday home. That is pretty standard across the market.
Sometimes, borrowers will take out a loan to pay for a holiday and we also get applications from borrowers looking to pay their tax bill.
BA: Is there anything about the process of applying for a second charge mortgage that brokers should be aware of?
LM: Probably that the process is extremely streamlined and efficient, which means funds can be released much quicker than in the first charge market. Applications can complete within a week, which is unheard of in the mainstream market.
At Norton, we have our own bespoke sourcing system with lender API, which is also connected to Equifax and the Land Registry. This enables us to give lender decisions instantly, which helps to speed up the application process.
We also have a dedicated team of advisers who process the applications from start to finish, which provides consistency for brokers and gives them one single point of contact.
BA: What advice would you give to brokers who say they are too busy to offer second charge mortgages?
LM: Let us take the stress away. Our call centre is open seven days a week, so refer your client to us along with some basic information and we can do the rest. You will still own the client, but we can do the work and provide the advice, leaving you free to focus on other business.
