‘Think I can if..then go and find the if’ – Steve Walker on second charges

Indeed, latest figures from the the Finance and Leasing Association show the market grew by 6% in the 12 months to August 2016. No mean feat given the regulatory overhaul we’ve gone through in recent months. But before we all rest on our laurels and raise a glass to our ‘booming’ market let’s take a moment for a few home truths.

I’m been involved in the second charge sector for many years now and it dawned on me recently that back in the early 2000s when I was general manager of Purple Loans we were completing as many deals in one month on our own as the whole sector completes now. Many other firms would have been doing the same.

The fact is, as an industry we keep talking about increasing volumes but none of us are actually looking at the number of units being completed. Back in 2002 the average loan was around £20,000. Today we’re looking at averages closer to £100,000. So if the number of completions were the same as the early 2000s we should expect volumes to be four or five times higher. This is certainly not the case. So it’s simple, the market is ‘growing’ because loan size has grown. In terms of how many loans we’re completing, we’re actually going backwards.

The reason for this is two fold – there’s the issue of clients not knowing the product exists. In 2002 we, and other firms, were spending over £1m per month to generate second charge awareness and enquiries. Who is promoting second charges now? Certainly I don’t think mortgage brokers are.

And there’s the issue of changing broker mindsets. It’s not just about second charges, it’s about all specialist products. Specialist lending is a mindset. Some brokers have it – many don’t. The temptation to cherry pick is undeniable but it is easy to serve more clients and generate more income by referring anything off piste so why wouldn’t you?

We need to stop being restricted to our own perceptions of what is possible. I say to my staff don’t think ‘I cant because…’. Instead think “I can if…”. Then go and find the ‘if’.

What if there was a lender which didn’t need consent from the first charge lender? What if a top up loan was available to bridge an equity shortfall? What if you could raise an extra £30,000 without security? What if the client’s adverse wasn’t a problem? What if a lender will accept clients on probation? What if someone will lend to a business without accounts?

The fact is there is a solution more often than we think – sometimes from an unexpected quarter – but by assuming you can’t help a client you’re never going to find it. Become solution-orientated – not problem-fixated. Partner with a firm you trust and give them a call with any unorthodox cases. The case you think could never be placed may actually be easier than you think.

Only by telling our clients the solutions we have and by changing the way the industry thinks do we stand any chance of seeing the seconds market reaching its full potential.