One of those things, I thought, was the way in which mortgage brokers should now be offering second charge mortgages.
Yet lately it seems this debate, which should have been put to bed long ago, has reared its head again.
Let’s be clear. The Treating Customers Fairly (TCF) approach is to consider seconds and further advances consistently alongside first mortgages and offer whichever is suitable.
This doesn’t necessarily mean advising on a second if it’s not your area of expertise as there are plenty of referral options.
It does mean identifying when a remortgage isn’t suitable and coming up with an alternative.
By following this process your client can rest assured that they’ve got the very best solution for their circumstances.
Shoehorned into remortgage
However, it seems there is some uncertainty around this in some corners of the market.
Apparently, there are some in the industry who still believe a second charge should essentially be a last resort.
They believe a broker should only offer a second charge if, and only if, there is no way of doing a remortgage.
That means whenever possible borrowers are shoehorned into a remortgage, potentially at higher rates than the existing mortgage, simply because a product exists. A second will not even be considered.
Now, it can’t just be me who sees the flaws in this approach.
Not only a backup plan
Are we really suggesting borrowers who have a cracking tracker rate should give it up to remortgage when a second would have been perfectly suitable?
Or that a borrower requiring a higher loan-to-value (LTV) advance should move the entire borrowing on to that higher LTV rate, when they could have kept the low LTV mortgage and just borrowed the extra amount at higher rates?
With rates lower than ever and the sector now regulated by the same regulator as first charge mortgages there is absolutely no reason for seconds to be seen as a backup plan.
A mathematical comparison can be done on most sourcing platforms and there are numerous options how to proceed from there.
Brokers can advise on seconds themselves or refer clients when a second is more suitable.
So why is this debate still happening?