Anderson, formerly head of Bank of Ireland’s head of sales and distribution, joined Paragon earlier this year in the newly created role of customer retention and partnerships director, where he works on improving the lender’s proposition and existing customer relationships.
He told Mortgage Solutions what his plans are for Paragon, where the key challenges are and opportunities are, and how he wants to strengthen its relationships with brokers.
Anna Sagar, reporter at Mortgage Solutions (AS): Having joined the lender recently, can you tell us about what attracted you to Paragon initially?
Russell Anderson, customer retention and partnerships director at Paragon (RA): I have been working in banking for 20 years and within the mortgages sector for the last 15. Within that time, I have developed a passion for mortgages and enjoy helping distribution partners, brokers, and customers with complex and or specialist mortgages.
Paragon is a leading specialist lender with an excellent brand in the industry so it was the correct fit to further my career in the specialist sector.
AS: Tell us about what the newly-created role of customer retention and partnerships director entail?
RA: The key aspect of my role is to enhance the service offering to our existing brokers and customers when they are looking to switch to a new rate and or borrow some additional funds.
Central to this is strengthening relationships with key distribution partners to support our retention growth plans.
AS: What are your near-term and long-term plans for Paragon?
RA: To lead and grow the successful existing customer team by bringing fresh and innovative ideas. I also plan to exceed our retention growth plan and support our brokers and customers through the existing customer journey, focusing on a simplified approach.
AS: Where are the biggest opportunities and challenges as specialist, complex buy-to-let lender and how will Paragon differentiate itself from other lenders?
RA: The existing customer journey for both product switch and further lending is a big opportunity for Paragon. This year we have made a number of changes in these areas that help to differentiate Paragon from other lenders while delivering high levels of service. In doing this we will enhance our new business offering and support the growth of our mortgage proposition.
An example of this was Paragon being amongst the first specialist lenders, if not the first, to extend the window in which borrowers with buy-to-let mortgages reaching maturity can switch products. With recent increases to the base rate of interest, and further rises anticipated, we’re providing the opportunity for borrowers to switch to a new product sooner rather than later, locking in a deal.
Looking at the challenges faced by Paragon, I’d say one of the most prevailing for us, and I imagine many companies, is the regulatory environment for landlords. The proposed changes to EPC ratings in the private rented sector present major challenges, if implemented, and landlords and lenders will need to work closely together to deliver.
AS: What are the biggest opportunities and challenges around customer retention? What will Paragon’s strategy be around this?
RA: Central to Paragon’s strategy is a simplified process to make things quicker and easier for both brokers and borrowers.
An example of this is the work we’ve done to streamline the further advance process. This involves assessing the information we already hold on a landlord customer and assigning them a tier based on this. Depending on a customer’s tier, we have the ability to then pre-validate them and offer a further advance without the need to go through the full application, removing the need for things like full physical valuations.
Another key pillar of our strategy is to strengthen relationships with brokers, who are a vital component of our customer retention work and wider growth plans. Putting our money where our mouth is, we recently announced that brokers introducing product switches to our other buy-to-let mortgages will receive an increased procuration fee.
Quantum Mortgages was launched earlier this year and is headed by Axis Bank’s former head of buy-to-let lending Jason Neale.
The lender offers a range of products, including options for single unit, multi-units, specialist products, expat and foreign nationals, limited company specialist purpose vehicle, and green products.
It also launched a ‘green loan to value boost’ mortgage earlier this year.
Criteria Brain is a criteria sourcing system used by advisers and brokers to help source lenders for more complex borrowers particular needs and circumstances.
Other lenders it has recently added to its platform include Market Financial Solutions, Shawbrook Bank, CHL Mortgages and Generation Home.
Neil Wyatt (pictured), sales and marketing director at Mortgage Brain, said: “This is a major milestone for Criteria Brain, as we always strive to expand our platforms with a range of specialist lenders such as Quantum Mortgages.
“There have been several lenders go live on the platform in the past few months, with more still to come, which demonstrates the growing reputation of Criteria Brain.”
Spencer Gale, sales and marketing director at Quantum Mortgages, added: “We are delighted to go live on both Criteria Brain and Sourcing Brain. In this current climate, advisers have a really challenging job in trying to find the most suitable solution for their clients, given the number of changes that take place in the marketplace on a daily or weekly basis.
“Having access to these tools and being able to source across multiple lenders on Mortgage Brain and thousands of pieces of criteria in Criteria Brain, saves brokers and their clients invaluable time and we are keen to support this.”
Matt McCullough (pictured), national sales manager at Aldermore Bank said 29 per cent of active buy-to-lets are sat in limited companies, a three per cent uplift from last year.
UK buy to let companies hold a total of 583,000 mortgaged properties, or almost a third of all outstanding buy-to-let mortgages.
As the percentage of financing costs reduced to 0 per cent in the tax year ended 2021, one out of every two buy-to-let mortgages were taken out by landlords with a company.
McCullough outlined the substantial benefits of using these tax efficient wrappers, although he warned against adding children’s names as shareholders, however well-intended, because it is illegal.
He said the Aldermore limited company product allows up to six shareholders or directors, day one trading within a Special Purpose Vehicle (SPV) wrapper, fees assisted legals, and product switches among other benefits including capital raising.
The lender said the funding, which comes from multiple “global financial institutions”, will be devoted towards growing its loan book across both bridging and buy-to-let mortgage products.
MFS said having multiple dedicated funding lines meant it now had the capacity to grow its loan book to a target of £1bn in the next 12 months, with large bridging loans and buy to let two being key areas of growth.
The lender said its team had doubled in size over the last year, but would be expanding further in the coming weeks. It is currently recruiting across a range of roles, including underwriters, business development managers and marketers.
MFS moved into the buy-to-let market earlier this year, to complement its bridging proposition.
Paresh Raja (pictured), CEO at MFS, said the new funding would “greatly accelerate growth” across its various product lines, particularly buy to let.
He continued: “Following a successful 2021, in which our team grew rapidly, we will now look to hire the best talent across the bridging and buy-to-let markets. In turn, we will reinforce the quality of the products and services that we deliver to brokers and private clients.
“We have bold ambitions, wanting to increase our loan book to £1bn by early 2023. We’re very confident that between our bridging, large loan and buy-to-let products, and with such strong funding lines and great personnel in place, we have all the components in place to meet and then surpass our goals.”
The deal, which is subject to regulatory approval, will bring the number of mortgage advisers supported by MSS to over 1,450.
MSS Group, which is also the parent company of mortgage network Stonebridge, said the investment would enhance Connect’s financial strength and give it the ability to develop its proposition as it continues to increase its UK footprint.
Connect has over 250 appointed representative (AR) advisers, a number it expected to increase.
Connect said the MSS investment, and the existing companies in its group working closely together, would deliver greater scale and influence across the lending, insurance and surveying sectors.
Liz Syms chief executive, Kevin Thomson, sales director and Jane Benjamin, director of mortgages will all remain in place as the Connect senior leadership team. MSS representatives will join the Connect board in a non-executive capacity.
Liz Syms (pictured), chief executive of Connect, said: “This marks the next step in the evolution of Connect and will enhance our position as a major player in the specialist mortgage network market. The operations of both groups overlap without competing and by working together we will be able to secure additional benefits and operating efficiencies.
“We are really looking forward to working with the MSS team who have an impressive background in supporting business growth. The financial stability and logistical support provided by MSS will enable us to further develop our already market-leading proposition in order that we are able to continue the significant growth we have achieved over the past two years.”
Rob Clifford, chief commercial executive at MSS Group and chief executive at Stonebridge, added: “Liz Syms and her team have done a hugely impressive job of building a fantastic business at Connect and one which we have admired for some years – we are really looking forward to working with them to help support their growth plans.
“MSS already has extensive relationships with mortgage lenders as a surveying and valuations partner and we intend to extend the group’s reach in terms of aggregating mortgage lending and building deeper relationships with those lenders.
Criteria Brain is used by advisers and brokers to help source lenders for more complex borrower’s particular needs and circumstances.
MFS, which specialises in bridging loans and buy-to-let (BTL) mortgages, said there were increasing reports of brokers struggling to place complicated cases.
In a survey of 100 UK-based brokers carried out by Mercantile Trust, 55 per cent said they regularly came across difficulties when trying to find a solution for first-time landlords, while 50 per cent stated that adverse credit had posed a problem for BTL applicants.
In January 2022, MFS added BTL mortgages to its bridging loan products. The mortgages are suitable for clients in complex situations, as well as corporate or overseas structures, including offshore companies, trusts and foreign nationals.
Mike Cook, chief mortgage officer at MFS, said: “At MFS, we’re proud of the fact that we will take on cases that are too complicated for many other lenders. Our experienced underwriters take an innovative approach to navigating the challenges each deal presents, always going the extra mile to ensure the best outcome for the borrower.
“We are excited to be working with Criteria Brain to ensure greater access to our products. It’s a great platform for brokers, and we’re confident that by adding our BTL mortgages to the available products we will better serve those more complicated corners of the market that are too often neglected by other lenders.”
Neil Wyatt (pictured), sales and marketing director at Mortgage Brain, added: “Speed and flexibility are vital for brokers. That’s why we’re always looking to expand our platform and provide a greater range of lenders that can deliver the right product for the borrower in a timely manner
“It is great to have MFS join Criteria Brain. There is a real need for more specialist lenders able to handle complex cases at present, so this will be a positive development for the brokers we work with.”
Pitch 4 Finance was launched last year with the aim of helping intermediaries look for products in the specialist market. Its technology matches borrowers and brokers with multiple lenders, who pitch for the case.
https://www.mortgagesolutions.co.uk/specialist-lending/2021/04/13/specialist-criteria-search-platform-pitch-4-finance-launches-to-brokers/
Speaking to Specialist Lending Solutions nearly a year on from its launch, founder and chief executive Miranda Khadr (pictured) said the platform has over 190 lenders and 1,000 brokers were registered, with further growth on the horizon.
Khadr said that she came up with the platform to provide a more centralised source of information for the specialist lending space.
She said: “Our belief is it [the platform] should be as whole of market as possible, without being able to say I have definitely approached all lenders in the marketplace you have no way of finding and testing whether or not your solution is correct [for your customer].”
She added that currently the split between brokers and clients using the platform directly was 50/50, but said the platform would benefit brokers especially.
She said it had got “good feedback” from its regular broker users, and experienced brokers would use it as a sense check to ensure they had got the best deal for their client.
Registration is free for brokers and the platform charges 0.25 per cent, which Khadr said it “fraction of the cost” of other packagers.
“I want to help brokers, so they are able to give the best solution but not charge the packaging rates that they were previously charged,” she said.
She added that Pitch 4 Finance would also save brokers time and effort as their team would follow up with lenders, get them to update criteria and ask relevant questions.
The reduced administrative burden may also minimise the need for additional hires, allow brokers to spend more time with customers, and speedier offers will bring more positive customer experience which is beneficial for the referral cycle.
Khadr said: “I think across the industry as a whole, brokers are a slightly unsung hero. They’re helping someone achieve a future that they aspire to and they’re trying to do that in the best possible way with a solution that best fits the client.
“Sometimes that’s not just about money, or the cost of a piece of work. So, anything that you can take away work-wise so they can help someone get to their aspiration that’s got to be good.”
Commercial development ‘product gaps’
Khadr said Pitch 4 Finance was looking to grow the number of lenders on its platform, whether they were big or small and across a number of specialisms including specialist, commercial, development, bridging, complex buy-to-let, business lenders, invoice finance and peer-2-peer.
She added that some lenders listed on the platform did not advertise, such as private banks, and were in a “secondary hidden lender panel”. One example included a New York fund that lent to theatres and theatre productions.
Looking across the market, she said the commercial development sector had product gaps lenders could look at.
She explained: “We are asking lenders to look at the product gaps. For a while there weren’t many people at all doing commercial development. People would have commercial development and unless it was pre-let or pre-purchase, certainly during the pandemic, it was almost impossible to place.
“It has improved now but I still think there’s room for improvement.”
She added: “Commercial development is underfunded and to tick every box in that market is quite hard, especially on smaller projects. So I think reaching out to lenders in our space and having that conversation around gaps is really important.”
Khadr said the platform was also going to focus on business loans as some lenders didn’t offer them.
She said: “The process is faster and fairly straightforward. In some cases, less information is required and because of some of the tech that’s out there, like Xero, showing me the figures that’s easier business loans.”
Plans for the future
Khadr said there were multiple ideas in the works to build on the platform, including an API integration, lead provision service and reminder system.
She said the platform was currently working on API integrations, which will minimise the need for brokers to input information multiple times and information would already be on a lender’s board.
Khadr said there were some challenges to this due to the different CRM systems but was optimistic it would save brokers time and effort.
Khadr continued that the firm was also considering a lead provision service where it would provide leads to brokerages and would only charge on completion, but said she wanted to engage more with brokers to ensure such a service would work for them.
She is also contemplating a second reminder system that diarises and issues reminders for brokers for renewals and further potential business so they can find existing opportunities easily.
Khadr said breaking down key dates in this way could save brokers two to three hours a day and provide a format where it was “really easy for that broker to stay in touch”.
She said the firm wanted to continue with webinars and was considering doing drop-in sessions where brokers can come with difficult or challenging cases.
Khadr added that there would be a second version of Pitch 4 Finance which was aiming to provide brokers with a white-label technology solution where their client has their own dashboard and can get updates on a brokers’ progress.
She noted that the company was rebranding the site at the end of March and “going quite heavily down the educational piece” and trying to do more segmentation within its audience.
Whether it was complex credit, second charge, complex buy-to-let, bridging or commercial finance, this year was a rollercoaster.
One thing is certain, the specialist lending sector continues to be of vital importance to help so many people achieve their housing goals, and is only set to go from strength-to-strength in the coming years.
It has been a joy to cover this sector and to see you many of you at face-to-face events again, and we are excited for what the next year has in store for the specialist lending arena.
This Christmas may not have turned out as many of us expected, so a special shout-out goes to those who are having to isolate or cannot spend it with friends and family.
From everyone here at AE3 Media, have a very Merry Christmas and a Happy New Year.
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