Positive Lending doubles second charge mortgage completions

The firm would not say how many transactions it completed but that it had transacted twice as many by the end of August than back in May and it believed its new fee structure was to credit.

Positive Lending introduced a flat-fee in May, when it started to charge a packager fee of £995 for residential second charge mortgages and left it up to the broker to collect the procuration and broker fees.

Chairman Paul McGonigle said: “Earlier this year Positive Lending launched a fresh approach for second charge mortgages and the response has been fantastic. Our intermediary partners tell us that they appreciate the transparency of our fee structure and, more importantly, that our proposition means they can ensure the very best and most cost effective loan outcome for their clients.”

Second charge mortgages came under the auspices of the Financial Conduct Authority (FCA) following the Mortgage Credit Directive (MCD) in March, which brought first and second charge mortgages under one regulatory umbrella.

This allowed master brokers to adopt a more flexible charging structure, singling out advice and application fees.

In contrast, prior to the MCD – under the rules of the Consumer Credit Act – master brokers were prevented from charging customers upfront for costs to process the loan. This resulted in a bundling of direct costs into one master broker fee, which was then added to the loan on completion, effectively forcing those who completed loans to subsidise those who had pulled out.

Following the regulatory changes some packagers opted for the flat fee model, while others stuck with the bundled version – both delivering arguments as to why one version was better than the other.

McGonigle said Positive Lending had benefitted from brokers turning away from bundled products. He said: “With so many packagers insisting on more complex and expensive second charge fee structures, we’ve attracted many new intermediary relationships due to our transparent and fair offering.

“Now our revolutionary proposition has been tested and the reaction is overwhelming; we have more than doubled our second charge mortgage completions since the launch of our £995 fee earlier in the year.”

Positive Lending provides access to the whole of market, including exclusive and semi-exclusive loan plans. It also operates in bridging, commercial, development and specialist buy-to-let funding through professional intermediaries.

In August it announced non-executive chairman John Malone was to step down after one year with the firm. He had joined the firm with a ‘short-term commitment’, it said.