However, discussions regarding more specialist areas, such as bridging and commercial loans, can be noticeably absent. But why is this?
It’s a bit of an elephant in the room – while some networks may operate an obligatory specialist referral panel, not all networks encourage brokers to actively advise in this area of the market themselves.
There may be all kinds of reasons why they are reluctant to encourage brokers to explore areas of the market such as bridging and commercial. It could be due to perceived risk and a belief that this type of lending poses greater challenges to the broker and network, or it could be due to a financial arrangement a network operates with a referral partner.
Branching out to specialist mortgages
Unlike a residential mortgage, commercial loans, for example, are more about having good connections with business development managers (BDMs) rather than going through a sourcing system. While it’s true that commercial and bridging mortgages might require more work for the broker, such cases can also be more financially rewarding.
I think it’s time the industry opened up the discussion and asked the question as to why some network models don’t help brokers more in this area.
We no longer operate in a mortgage market where the clients contacting brokers are all vanilla cases. Instead of deterring a broker from handling a specialist case themselves, networks should be encouraging them to grow their business and expertise if there is an area they want to pursue.
Bridging completions reached £1.69bn in Q4 2023, an 18.4% increase from Q3 2023, according to the Association of Short Term Lenders (ASTL). Meanwhile, a recent report from property lender Together; Opportunities and Outlook: The Future of Commercial Property, outlines how UK commercial property lending is set to grow from £90bn in 2023 to £118bn in 2028. That’s a 32% increase over the next five years – and it’s time for brokers to grab a slice of that pie.
Empowering brokers
While some brokers feel more confident handing over a client to a referral partner, others might wish to do it themselves but be lacking the support, which is a shame as bridging and commercial can make for some interesting cases.
For networks, there are other ways; a 100% file checking process can help mitigate any risk the network might be worried about, as can offering members training and support to give them knowledge and empower them to advise on these areas themselves.
If a broker needs to hand over the client to a referral partner, that not only means losing a level of control over their client, but also splitting the commission – as well as potentially having to pay another fee to some networks to access their specialist panel.
As mentioned, the decision can also be a financial one. We operate on a flat monthly fee basis, with brokers keeping 100% of their proc fees and commissions. This isn’t standard across the industry, however, and if a network feels a broker can bring in more commission through less time-consuming residential mortgages, this may be the primary focus of the network.
Of course, even with the option available, not all brokers want to branch out into more specialised areas and feel that their comfort zone is residential mortgages.
Different ways of working
We often talk about how mortgage borrowers are not one-size-fits-all, and the same can be true of mortgage brokers. We launched our ‘mortgage desk’ towards the end of 2022, and this has offered a real insight into the different ways of working for brokers.
As well as operating as a help desk, it also offers a referral service for brokers if they don’t have time or don’t wish to advise on the mortgage themselves. In some instances, the desk can also work in the opposite way, so a broker might want to focus on a larger more complex case and outsource the more regular residential cases to the mortgage desk.
Already this year, we have had 21 completions through our single adviser on the desk. These are from all areas of the mortgage market – it might be commercial, or a borrower with credit problems; the mortgage desk can help advise brokers on how best to place the case or simply refer it on and split the commission – which means the broker doesn’t need to turn potential clients away.
It’s all about choice, and I think it’s time we opened up the discussion as an industry as to why more isn’t being done to equip and encourage brokers into more specialist areas. Networks should be there to encourage their members to grow and thrive.
Brokers need to have faith in themselves, but so too does their network.
