The deal values First Mortgage Direct at £20.6m and brings together two firms with completions worth over £16bn of mortgage lending in 2018.
First Mortgage will join the MAB group but retain its own brand with Ian McGrail remaining as managing director.
The firm has a strong presence across Scotland where the business was established over two decades ago, with 90 employed advisers across its Edinburgh head office, 14 mortgage shops and telephone advice centre, and offers a multi-channel approach to providing advice.
In a statement announcing the deal, MAB said: “This is an area that both MAB and First Mortgage will develop further together, leveraging the expertise and scale in both businesses in order to also accelerate respective ambitious growth plans.”
First Mortgage operates a no-fee model and has developed strong lead generation, acquiring more than half its new customers via referrals from existing customers along with “outstanding repeat business levels”, the statement added.
Like MAB, the firm also focuses on customer protection needs and approximately half of its revenues are derived from protection products.
“First Mortgage is one of the very strongest and most forward-thinking businesses in the UK mortgage intermediary market, with customers’ current and future needs both integral to its strategy,” the MAB statement continued.
“First Mortgage is highly regarded in the new homes market in Scotland, making it complementary to MAB which also holds a significant presence in this sector more widely across the UK,” it added.
The move will enable MAB to further grow its adviser numbers and market share and is expected to provide significant further growth opportunities for both firms.
First Mortgage’s omni-channel approach, and particularly its telephony strategy, will be leveraged further through the planned roll out of MAB’s evolving technology.
In 2018, First Mortgage arranged around £2bn in mortgage lending and in the nine months ended 31 December 2018 it achieved revenue of £10.2m and profit before tax of £1.5m.
Mortgage Advice Bureau managing director Ben Thompson (pictured) told Mortgage Solutions that it was an ideal fit for the two businesses.
“First Mortgage has a strong brand with high customer satisfaction and has a very high-quality risk and compliance side,” he said.
“It’s a scalable business that complements what we do in our group, along with being strong in protection advice, so it is very much the ideal fit for both firms.
“We have joint growth plans and we’re in it for the long term.
“First Mortgage will become part of the MAB group but it’s a big business that’s directly authorised and will retain its own brand,” he added.
First Mortgage is jointly owned by father and son Robert and Ian McGrail.
Robert McGrail, a director, is selling his full stake, while managing director Ian McGrail will retain 20 per cent of the business, with an option being agreed for MAB to complete the full purchase between 2024 and 2030 at a value of up to £10m.
Ian McGrail said: “I’m really pleased to be partnering with MAB. Our plans at First Mortgage are full of ambition with clear objectives that we are very much focused on achieving.
“With MAB I feel strongly that we have picked the best strategic partner to enable us to not only protect what we have built so far, but also help us achieve our big ambitions over the coming years.”