Speaking at Sandown Park, United Trust Bank commercial director – mortgages Buster Tolfree said the new wave of regulations and lenders had vastly improved the market.
He also responded to concerns about the scale of fees being charged by packagers, urging brokers to shop around and not just to accept a fee if they feel it is inappropriate.
Explaining how the market had changed over the last decade he said: “There’s a large bank presence now which simply didn’t exist 10 years ago.
“I’m not saying there aren’t still some issues we could work through today, as there is in any market, but from a lending point of view its dominated by banks.
“It’s not the warehouse line, high risk-taking lenders that existed pre-2008,” he added.
Prime market now
Tolfree noted that second charge loans had a place in a broker’s toolkit which should be used, but only where appropriate.
And he emphasised that it was a prime market now, subject to the same affordability and refencing checks as first charges.
Second charge loans are typically used for conducting home improvements and renovations while including some form of debt consolidation.
Loans are generally for around £50,000, taken out for just 14 years at an average LTV of 65%, but commonly paid back within five years.
However, Tolfree also noted that there were new developments in the sector.
“An emerging loan purpose for us is buy-to-let purchase, where people are raising funds on their main residence maybe £150,000 to £170,000 to buy a buy-to-let outright, thereby circumnavigating some of the newer requirements,” he said.
“Business investment is another common one, where they maybe looking to take on more land, new business premises or more machinery.”
Shop around for packagers
And Tolfree responded to the significant concerns raised earlier in the event about the ‘mind-blowing’ size of some packager fees by urging brokers to shop around and to trust packagers and lenders who were transparent.
“The advice I would give to any mortgage adviser is, if you were replacing your kitchen, you’re not going to take the quote from the very first people that come around,” he said.
“You’re probably going to get two or three different kitchen fitters, get an understanding of which one you like, which one is best value for money.
“That’s no different here.
“If you’ve had a bad experience with a master broker or a specialist distributor who you felt has charged a larger fee than they should have done, I can guarantee you there are master brokers out there who do not do that.”
He also highlighted that there were some lenders who worked with brokers directly, adding: “Any lender worth their salt will publish what their valuation fees are on their website.”