Case study: Specialist lending as standard – Together and 3mc

Doug Hall is a director at packager & distributor 3mc and works closely with lenders to find funding solutions for brokers and their clients.

The packaging business was founded 23 years ago and deals with a wide range of specialist lenders, including Together, for which it packages a large number of first charge residential and first charge buy-to-let mortgages.

“We operate in wider markets of course,” explains Hall, “but we find Together particularly useful for placing first charge business where the income or the property type is non-standard.”

The 11^th hour rescue deal

Doug explains a recent such case where Together was able to help out quickly and save the broker’s client’s purchase.

“A broker from the East Midlands recently approached us with a deal. It was a residential remortgage to raise around £500,000 on a property worth double that amount. The client wanted to release the equity to purchase an additional property.

“The challenge was his income. He’s a company director but the firm, which provides management training to large businesses, had recently lost two of its four directors. They’d resigned from the business and this was making lenders nervous about the viability and profitability of the company going forward. It made it harder to assess the applicant’s future income.

“Some lenders wouldn’t do it as they wanted a longer history of the business with just the remaining two directors in place (a minimum of 12 months). They needed reassurance that they could sustain the company without two of its key people.

“But we did manage to find a lender that would take the case and we had an initial decision in principle, subject to certain caveats. All was looking good.

“That was until the lender closed its doors, announcing it was stopping accepting new acquisition business – leaving our broker, and the client, in the lurch.

“In order to help the client remortgage and raise funds to purchase the property we had to move quickly. We put the case to Together who were happy to consider using projections from the accountant based on the new structure of the business. We had the benefit of the Together onsite underwriter which helped speed things up too.

“The applicant secured a two-year fixed rate and, once the business is more established under the new directors at the end of the deal, his broker will be able to remortgage him back into the mainstream.

“Brokers will empathise with the frustration of having a client that can afford the repayments but have non-standard or complicated income. Together is good at understanding these different income streams and has the confidence to make lending decisions on these non-standard applications.”

Across the spectrum

Specialist lending isn’t just for big-ticket deals, and 3mc packages a wide range of cases, from multi-million-pound complex finance deals, to modest £100,000 residential cases, where the only reason the client has slipped out of the mainstream is a non-standard income stream or property type.

Hall explains: “We operate across the country and a lot of our business is residential – our average loan size is £176,000.

“We deal with a range of lenders and have in-house underwriters from seven of them, which makes an enormous difference to processing times. In some cases, it’s quicker to go through us than directly to the lender because our in-house underwriters are so good and our processes are tight.”

Doug believes that brokers should have the choice of dealing with all lenders directly or via a packager. But he explains that one advantage of a packager is that their day-to-day business is in specialist lending, not mainstream markets.

“I meet many great brokers and they are experts in placing mainstream mortgages with high street lenders,” he explains.

“Only a small proportion of their clients require specialist solutions so it’s difficult for them to keep their knowledge up to date. At 3mc we are the opposite – our expertise lies in placing specialist cases, so working with us lets the broker focus on what they are good at.”

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