Under the Mortgage Credit Directive (MCD), from the 21 March a mortgage adviser must discuss the option of a second charge loan as an alternative to a remortgage when a borrower is considering refinancing.
Second charges will be become regulated by the Financial Conduct Authority (FCA) at the same time. Advisers have the option of giving full advice on both first and second charge mortgages or referring a client who decides they want to find out more about the second charge option.
The V Loans service will take the referral from the mortgage intermediary, provide advice and satisfy regulatory requirements with a payment directed back to the originating broker if the referral is successful.
V Loans has estimated that for approximately one in 10 remortgage customers a second charge will be a more suitable option. It said these low statistics may put many mortgage advisers off providing second charge advice in-house.
Marie Grundy (pictured), managing director of V Loans, said: “With MCD disclosure requirements looming, consumers are now more engaged than ever before with the concept of second charge mortgages. As a result advisers who opt not to have seconds within scope at all are missing a huge opportunity for placing business which otherwise is either unsuitable for first charge or where a first remortgage is unavailable.
V Loans is running workshops to help advisers identify second charge opportunities when conducting client interviews.
