Some brokers are voicing concerns about additional time and costs to collate the affordability evidence for each client. Others however are much more sanguine. They recognise that new costs are only a problem if they don’t result in new value added. Value that can be charged on to clients.
Among the thousands of mortgage brokers that Source deals with are some who have made weathering the numerous regulatory squalls of the past decade look effortless. I thought it might be worthwhile sharing some of the best of the MMR solutions we see emerging among them.
Keep it simple. Don’t overlook the easy wins.
If our observations illustrate anything, it is that simple solutions, consistently executed, are often best. The three stage sales process outlined below is probably not a million miles from what you already do, but formalising it and placing a value on each stage could help you adapt to the changing environment.
Stage one: sourcing
Helping your client to source a mortgage deal from across the whole market (not just the intermediary routes) is the starting point.
Many brokers have shied away from this for fear of losing the case to a lender direct deal, but instead of fearing this outcome, embrace it by highlighting to your client that for a fee of (say) £149 you will collect all the relevant details from them and source the most appropriate solution from the whole market, including direct lenders.
Stage two: placement
Given this choice, the client could take the lender direct solution from your report and make their own arrangements. That’s okay. They’ve already paid you for that report. Or they could place the business with you through an intermediary route (for which your fee is covered by the proc fee). However, you could offer the client a third alternative = a coaching facility with a lender direct deal.
Most lenders are still looking for reasons not to lend and clients are not necessarily best placed to present their case well enough to get it through. That’s where your coaching service comes in. You can ensure that they say and do the right things; present the necessary information; do not volunteer unnecessary information that could jeopardise the case; and help them to complete the paperwork.
Critical to the success of this approach is helping your clients understand the pitfalls and that they may only get one shot at this. Rejected applications register on the Hunter system, as do previous credit searches, thus reducing your clients attractiveness to another lender.
A fee of £199 is not unreasonable for this coaching service and whilst not at the same level as previous procuration fee levels, it is, when combined with stages one and three, a decent return on the time spent.
Stage three: protection
Your client will need insurance solutions: buildings and contents insurance, life insurance, income protection, homebuyers’ protection and home emergency cover. This is a sourcing service you can provide for your clients to save them time and money. The initial and ongoing renewal commission you receive from the insurer will more than offset the cost of your time.
Of course your clients could simply reject any, or all three stages of the service you offer, but you will never know if you don’t try.
