Clever Lending introduces dual fee option for second charges

The master broker’s two options for customers consist of a smaller up-front fee for packaging the case and then applicable subsequent fees on top or a larger one-off fee.

Fees in the second charge lending arena have been particularly contentious and last week Specialist Lending Solutions found brokers would like the Financial Conduct Authority (FCA) to introduce a cap.

Under Clever Lending’s first option, the client pays a £495 upfront fee on submission for packaging a second charge of any size and then pays subsequent fees, which it said were clearly itemised in the key facts illustration.

Clever said it had chosen this model as it believed many second charge clients may not be in a financial position to pay an upfront fee.

Sensible 2.5%

The second option is a modified version of Clever’s fee added proposition where a fee up to a maximum of £2,495 is added to the second charge.

It said in the vast majority of cases this would be the only fee the client pays and Clever will pay all costs from this.

The packager said: “With average loans in the industry being around the £100,000 mark, this will see the fee sit at a sensible 2.5%. But, lower loan sizes will enjoy lower fees.”

It added that it would continue with its 50/50 split on all net income with introducers and pay their fees the day after completion.

Transparency

Clever Lending managing director Sam Kirtikar said: “We are all about transparency and our new dual option introduces a more cohesive and straightforward fee structure that benefits everyone in the loan process.

“The new fees are easy to understand and provide for the packaging and advisory options for the broker and their customers. We fully appreciate that second charges should in essence be seen as specialist mortgages and many require them for debt consolidation.

“In this scenario, customers won’t have the fees readily available and therefore need to be able to rely on a fair and fixed fee on completion.”

Kirtikar added that he was confident the fees were fair to the customer and competitive in the market.