We recently appeared in Mortgage Solutions to outline our distribution plans for second charge mortgages.

Second charge mortgages will be subject to the same regulatory rules as first charge residential mortgages from 21 March 2016 to comply with the Mortgage Credit Directive (MCD).
In a survey conducted by Mortgage Solutions aimed at directly authorised (DA) mortgage brokers, the results showed that 37% of respondents were willing to place a second charge mortgage application directly with the lender, rather than through a second charge master broker.

The current distribution model for secured loans sees the main flow of business channelled through a handful of master brokers with direct access to the lender not available. Given the evident desire of advisers to continue doing business in a way which comes naturally to them, regardless of whether the application for finance relates to a first or second charge loan, they asked us what our model of distribution will look like post-MCD.

“Our plans are to give our advisers a choice while creating solutions that meet the evolving mortgage market landscape. If lenders provide an option to submit second charge business directly post-MCD, or even before, then we will ensure that our advisers are prepared for that.

Of course, we realise there will always be a place for master brokers. Their specialist knowledge can’t be overlooked and not every adviser, as proven by the survey results, will be wanting to advise on these products initially.

Remortgaging or a further advance is not always in the client’s best interest and consequently it’s essential that all options are considered. Therefore, in the initial period post-MCD, both advised and referral routes would be our preferred strategy.

Pre-MCD there are two aspects that we will be focusing on. Firstly how we support the training and education of these products to our members and secondly how we can support our technology providers to find solutions to source seconds, alongside first charge mortgages.”