Packagers play an important part in today’s intermediary mortgage market providing benefits to lenders and brokers.
For lenders, they provide not only an additional distribution channel, but also a way to test new products, pricing and criteria in a controlled and focused way.
By offering packagers ‘exclusives’, lenders not only have a means to get new products to market quickly, but to also test criteria and pricing without running the risk of being inundated with uncontrollable volumes of business.
For example, Kensington has a core product range that normally goes up to 85% loan-to-value (LTV), but has recently launched a 90% LTV range via a panel of selected packagers. Likewise, Precise Mortgages markets an 80% LTV deal for HMOs, rather than its standard 75%, via its premier packaging panel.
Packagers can also help lenders target products at specific markets, particularly if those markets are specialist niches such as the self-employed with just one year’s accounts, adverse credit, expat buy to let and HMOs.
Brokers benefit by having access to additional products that are not widely available elsewhere, especially in sectors of the market where it’s difficult placing clients with more unusual circumstances. These products typically offer more accommodating criteria, keener pricing or higher LTVs than others in the market.
Packagers can also act as a useful product filter, helping brokers focus in on those products that are most relevant to their clients.
As their name implies, packagers are also able to help brokers ‘package’ cases in readiness for underwriting. Some brokers believe this means handing control of their clients to a third party, but that doesn’t have to be the case.
At 3mc, for example, we’ll advise brokers about the range of supporting documentation that is required by a lender, but it’s then for the broker to liaise with their client and obtain that paperwork. Brokers never relinquish control of their clients to us.
Other packagers may offer to do everything, but the key point is that brokers always have the option to specify precisely what they want packagers to do on their behalf.
Packagers exist because they provide a useful service to both lenders and brokers. They offer a mix of product development, testing, marketing, distribution and administrative support. Once lenders and brokers understand what they are all about, there’s a high probability they’ll turn to them for help on an increasingly regular basis.
