Along with the welcome update that NatWest would not produce hard footprints for broker submitted cases, unless they progressed to a full application, the search for suitable mortgages in the ever-changing environment appears to be a trickier landscape to navigate. 

So this week, Mortgage Solutions is asking: Are you having to produce a significantly higher number of DIPs for each case? 

Andy Wilson, director of Andy Wilson FS 

We are not performing significantly higher numbers of DIPs, but this reflects the initial research we have always carried out to make a lender recommendation.  

Using mortgage lending criteria tools such as Knowledge bank and Criteria Hub help create the shortlist, and then Mortgage Broker Tools allows an affordability check. The lender business development managers (BDMs) can also be useful here if there is any doubt.  

Once all of this is complete, we can submit the DIP to the recommended lender with a good degree of certainty it will be accepted – and most cases are, first time. 

Where cases are declined, it will often be down to undeclared credit file issues. There can be disparities between the data stored across each of the credit file platforms.  

This means that sometimes using the wrong one misses adverse data stored on another. Also, the dark arts of credit scoring can be steeped in mystery and kill an application, with usually no appeal.  

However, we rarely have to submit more than two DIPs as a result. Needing to submit three would be a very bad day.  

This is no different to our normal ways of working, and getting it right first time is always the intention, instead of taking a punt that a lender might just take the case. 

It has long been a mystery to me why lenders would insist on leaving a hard footprint. Mortgages are not like unsecured credit, where a significant number of credit arrangements can be entered into on one day and allowing different providers to see recent activity becomes more important.  

The lenders who use soft footprints still create a hard footprint if the case comes in as an application that fits their risk profile, so it shouldn’t matter how many other DIPs have been requested.  

A high number of DIPs may just be that the adviser hasn’t been doing the initial research thoroughly enough. 

Adam Wells, co-founder of Lloyd Wells Mortgages 

It’s great news that NatWest has swapped to a soft footprint. It’s definitely one of my favourite lenders due to their good service, competitive products and flexible criteria.  

Having a soft footprint is just another string to its bow.  

Before we produce a recommendation and proceed with a decision in principle, we ask for as much of the client’s documentation as they can provide.  

This also includes a copy of their credit report.  

We believe we offer our clients a level of service they don’t get elsewhere and due to this our DIPs usually go through without a problem.  

The most important thing for our clients is getting them a positive result and if we have any doubts we will involve the lenders as much as possible, as early as possible.  

The biggest problem we have at the minute is down to how underwriters are assessing affordability and how this doesn’t always coincide with what the affordability calculators suggest.  

We’ve also had issues with BDMs not understanding their own criteria.  

Just this week I’ve had an issue with a gifted deposit that a BDM confirmed wouldn’t be a problem, only for it to be an automatic decline at DIP. Luckily the client had several options, and we were able to proceed elsewhere. 

It’s generally the same big high street lenders that cause the same issues and I’ve found other brokers have had similar issues. Ultimately, it just means we are less likely to recommend these lenders in the future. 

Akhil Mair, managing director of Our Mortgage Broker 

When it comes to a DIP, most lenders already offer soft footprints upfront – both for residential and buy to let. 

However, we double check beforehand in case they’ve changed their stance, because we don’t want a DIP to end up being a hard search. Then we apply accordingly. 

Prior to that, as part of the fact find we try to understand what the client’s expectations are in terms of rates and fees, then we do a deep dive into their credit profile. 

What we do now is, if a client has a county court judgement (CCJ) or missed payment, we ask them to download their credit file. That circumvents us placing a case with a high street lender who may or may not accept defaults. 

Sometimes the credit report shows one thing, and the lender picks up on another thing, so it gets referred for further checking or declined.  

If it is declined and we are confident it fits the lender’s criteria, we’ll pick up the phone, ask why it’s been declined and go through the credit report over the phone or send it to them for review as different details and timeframes are analysed. 

We do sometimes produce multiple DIPs but we try to minimise it so it’s done once or twice and we can work smarter. If we keep producing DIPs, it means we’re throwing mud at the wall and hoping it sticks. 

Because of the way the market is, lenders have increased appetite for certain levels of credit score. Many want clean histories with no blips in six years, let alone 24 or 36 months. 

You pay for what you get, if you want low rates hovering at one per cent, you’d need a really clean credit profile. 

The first comments came in response to the article: Lenders that cull BDMs do so at their peril – JLM 

Nick Morrey said: “The skill set of a business development manager (BDM) is actually not inconsiderable and their use to brokers for both pre-submission vetting and troubleshooter is invaluable.  

“I know some brokers will choose between two similarly priced lenders based on the BDM service that they may need.”  

He added: “I am in support of the above article on behalf of brokers everywhere. Lenders have had both a tough and bumper year so to then make culls in their support divisions would be both unfair on individuals who have likely worked very hard from home, often deepening relationships with brokers who didn’t engage pre-pandemic, and harmful to future profits.  

“In time, face-to-face visits will return, good BDMs will be at a premium so don’t let go of yours just for a teeny positive blip in profits to mask other failings. ‘They do so at their peril,’ indeed – and don’t say you weren’t warned.” 

An anonymous poster was in agreement, saying: “I concur. At least 50 per cent of the web chat interactions I’ve had have been less than worthless because they wasted my time.  

“Whereas being able to speak to my BDM I was on occasion able to persuade them to go outside criteria to place a case for an exceptional client.” 

Balance lender loss with ERC

The next comment was to the story: Legal & General trials equity release fixed early repayment charges 

Andy Wilson said: “The charging of early repayment charges (ERCs) is to reflect that potential loss to the lender of the client paying the loan back early.  

“However, I have long maintained that if some lenders can use fixed ERCs for lifetime mortgages that will charge a maximum of 10 per cent of the loan amount, there is no clear reason why lenders charging gilt based penalties can justify up to 20 to 25 per cent of the loan as a penalty charge.”  

Wilson added: “Surely the loss to the lender of early repayment cannot be so different? The fixed charged penalty lenders would suffer massive losses if the real loss was up to 25 per cent of the loan.” 

High gilt-based ERCs 

He said: “I attended a recent workshop on gilt-based ERCs along with many other brokers.  

“None of the three lenders using gilt calculations for their ERCs could offer any solid justification for such high gilt-based maximum penalties, while fixed ERCs as low as five per cent of the loan for five years followed by just three per cent for the next three years are available elsewhere.” 

“There are two huge criticisms of lifetime mortgages on social media – the potentially huge increase in rolled-up debts due to high rates of interest in the past, and ERCs for those trying to get out of the past high-rate deals now,” he added. 

Wilson said: “The sooner we can start to show the ERC amounts reasonably mitigate some loss to the lender for early repayment, the better.” 

However, appearing too human can result in errors and missteps which threaten to damage a company’s image. 

So this week, Mortgage Solutions is asking: To what extent do you consider social media as part of your brand? How does it affect what you post? 

Dominik Lipnicki, director of Your Mortgage Decisions 

Social media has increasingly played a large part in our personal as well as business lives.  

Platforms such as LinkedIn, Facebook and Twitter now form an integral part of our company’s PR strategy, both in terms of client acquisition and communication.  

While it is difficult to quantify the exact return on investment when it comes to social media, many of our clients rightly expect us to have that presence and looking into the future, this form of communication will only become more important. 

The firm’s social media accounts obviously will be run very differently to a personal account and strategy is key — understanding the desired message and having someone on hand to respond to any comments or messages is vital. 

Even when posting as a company, we need to be engaging. People are unlikely to follow an account that only tries to advertise or sell its services. 

The various platforms have their own uses and design features.  

Twitter is great to react to news, engage in conversations with clients and the industry. LinkedIn can be fantastic at making contacts with advisers and others within the mortgage world.  

It’s important to remember, however, that our clients may engage only on one platform, therefore our exposure needs to be as wide as possible.  

Many of our clients are acquired by way of the internet, hence social media and online reviews by clients form a vitally important part of our strategy.  

We pride ourselves on being easily approachable for our clients through whatever channel they feel comfortable using and we are always keen to explore new ways of being even more accessible. 

Martin Stewart, director of London Money 

The way business is developing, if your company is not on social media, and using it to the best of your ability to leverage your personal and corporate brand, then you are in danger of being washed away in a tsunami of engagement. 

Social media is a minefield in many respects and a continual learning curve as to what will work and what won’t. It is never an exact science but you can learn the mechanics quite quickly.  

The issue needs to be attacked early on; the discomfort of social media comes from the nervousness of using it. 

Our posts differ depending on the platform because it is important to understand which platform suits your personality best and make sure your audience understands you, which then helps them understand your message.  

We have and continue to build our business rapidly with the use of various social media. 

There is no other way that a small business can compete with the big players free of charge and we like to encourage all our brands to use social media at every opportunity. 

The biggest change we have seen over the past 12 months is the crossover between work and personal social media.  

It is now rapidly becoming the cult of personality and in any noisy environment it is important to stand out.  

Those who show the human side of themselves, as well as the corporate side, will do very well in the months and years ahead. 

James McGregor, director of Mesa Financial 

As a growing business, social media presence is a huge part of our brand.  

This is one of the key elements to growing our business and it contributes in so many ways. We try to add as much value as possible with our content, while also showcasing our expertise.  

This has a huge play on what we post. We always have in mind how our brand will be represented with every post. You cannot be complacent with your brand reputation.  

Our posts vary significantly depending on the platform. On LinkedIn, storytelling posts gather a lot of traction. People like success stories.  

We post visual content on Instagram, such as large properties or development sites, so people can see exactly what areas of business we are advising on.  

Twitter is a great tool for business news and introductions. We have built a large following of brokers and developers there, growing the network that we do business with.  

Facebook is the preferred platform for some clients and we have received great reviews there.  

Social media massively affects our company, from recruitment through to client acquisition.  

We have recruited three of our advisers through social media posting. It also helps to boost brand awareness with lenders.  

I mostly use social media for business purposes.  

I rarely post in my personal profiles. I’m not sure you can truly separate your social media from your professional life, so if I post online, I will always consider how this post will reflect our brand. 

This week’s comment was in response to the article: Cladding loan scheme should be abolished and paid for by industry and state, say MPs 

Arron Bardoe said: “In what other world would the victim be expected to pay remediation? 

“Where they are still trading, the developers should be fixing these problems or using their professional indemnity cover; and in turn they can sue the providers of the cladding if they remain in business.” 

He added: “If the government does decide to alleviate owners of the costs, it may help lenders to agree their mortgages, as they currently factor in the cost of any future works when considering applications.” 

With more experienced brokers tending to source suitable products on their own, some BDM visits may be more welcome than others. 

So this week, Mortgage Solutions is asking: Would being visited by certain BDMs less frequently still be productive for you? 

Phill Green, founder and director of Trufe 

BDMs are really important because they help clarify a broker’s thinking around a particular case. They’re a great conduit between a real life situation and how to make that case stand up. 

However, one of the reasons you might put less cases through certain lenders is the specialism.  

Not every case goes to high street lenders and those that are adverse specific, with complex incomes or commercial come along less frequently. 

Here, the broker’s knowledge might not be A1 so engaging with a BDM is vital to bring a case to life. 

The idea of giving BDMs more access to larger brokers who use them most does not fit. That just makes the larger broker stronger and the smaller broker weaker.  

If you look at some of the mortgage broker groups on social media, it’s quick to see which lenders get praise for maintaining service level standards. By putting a BDM service online or making it contact-free makes it ineffective. 

Those people generally aren’t trained to the same degree or don’t have the same level of authority to adjust and manipulate information appropriately. 

Eventually advisers won’t ring because they get a better service with another lender. 

BDMs need to be more accessible. It’s about having the influence to deviate from a black and white process and take something that’s slightly out-of-policy and still make it fit. 

In the absence of a BDM, that facility goes. 

Rob Gill, managing director of Altura Mortgage Finance 

I’ve had an interesting experience; I came from a larger company being Coreco where there were BDMs all the time.  

At least one a day, sometimes more than one at the same time and they’d be visiting 20-odd brokers, stay for a cup of tea and use our offices. 

When I started Altura, it was just me. I didn’t have a permanent office and no one wanted to visit as it was just me writing business.  

But I found that quite refreshing as I didn’t have people disturbing me because sometimes you might not want to see them. 

It’s their job, which is fair enough but sometimes you just want to get on with your job and carry on doing business. 

I don’t think I lost a huge amount by not seeing or being visiting by BDMs face-to-face; when I needed them, most of them were still there to talk on the phone and I found that invaluable.  

It helps to talk through a case or be reminded of criteria on a lender you might not have used for a while. 

If there are issues on anyone’s side a good BDM is worth their weight in gold. 

The remote way of things has worked for me with the caveat that it is nice to see people and catch up for a chat, but maybe not every single week. 

I’ve met some new BDMs over the last year who I can’t wait to meet but it’s working remotely for the time being. 

Ashley Brown, managing director of Money Sprite  

I’ve always considered BDMs to be a crucial part of the relationship between any lender and the broker community they wish to engage.  

Acting as the grease on the wheel, to ensure criteria is understood pre-application and wrinkles in the processing are resolved in an efficient manner. 

Calling some lenders can be a lucky dip.  

Will you get the happy, helpful and knowledgeable member of staff who knows the critical underwriting nuances that are seldom on the FAQs of the lender website? Or will it be someone off hand, possibly new or just plain ignorant of their own criteria?  

Your BDM is the safety net, to clarify or corroborate information. 

It is wholly understandable that lenders will focus most effort on their best performing accounts, it makes commercial sense.  

However, I think all brokers will have had that chance snippet of conversation with a niche lender who does something a little different on underwriting, that suits that unusual client situation.  

Much as sourcing systems and FAQs are useful in drilling down into criteria, the last few metres of the race are where the BDM shines with intricate detail. 

The training aspect BDMs can offer to whole companies is a welcome resource, with much information delivered quickly and precisely.  

However, where lender BDMs really shine, is when they are allowed to ‘get involved’ with that problem case or set of complex accounts which seemingly no one wants to understand.  

The lenders who encourage this and allow scope for BDMs to be a seamless part of the broking process, are the ones who build most credibility and plaudits from the adviser community. 

The first comment was to the story: FCA announces £10m fee for networks to tackle AR oversight failures 

Paul Smulovitch said: “For the average appointed representative who represents no risk and follows rules diligently, this is just more cost and likely to be even more red tape when time is already precious.” 

Facing ‘keyboard warriors’ 

The second comment came from Andy Wilson, under the article: Banter and bullying or community and kindness: five brokers open up about life on social media 

Wilson said: “I post quite heavily on LinkedIn, and occasionally on my own Facebook business page, but Twitter has for me fallen a bit by the wayside. 

“However, there are a lot of companies advertising for equity release on Facebook, and many of them are lead generation companies for equity release products.”

He added: “Almost inevitably, there will be anything up to 100 or more posts which are knee-jerk reactions from people who clearly do not understand the modern products, with flexible features and benefits.  

“’Don’t do it’ and ‘it’s a con’ they cry. So, I challenge them. ‘Why do you feel like that?’ or ‘what makes you say that?’.” 

Wilson said: “Those who bother to reply, and who aren’t simply keyboard warriors posting for a jolly, do state their arguments about it, but they are nearly always related to old non-regulated products with high exit charges, and bear no relation to the lifetime mortgages of today.  

“I try to educate and explain, but it is an uphill struggle with some. Some are violently opposed.”  

He added: “One poster was so incensed by the fact that I, as an adviser, had dared to challenge the seemingly popular view that all those involved with equity release should be hung, drawn and quartered, and even went so far as to post personal attacks on me, including a statement that he grouped me in with child molesters and paedophiles.  

“My wife was horrified, but I simply reported the posts to Facebook and within 20 minutes they had deleted his posts and issued a warning.” 

Wilson concluded: “Social media can be an offensive place. You just need to keep everything very polite and professional, and eventually some will realise you may actually be worth talking to after all.” 

So this week, Mortgage Solutions is asking: If you had the chance to develop a product with a lender, what would it be? 

Pete Mugleston, managing director of Online Mortgage Advisor 

This might sound controversial – I don’t think everyone needs consumer protection, yet everyone is bound by it. Few discuss the negatives of this, and I’m beginning to question whether we crossed a line a while back and didn’t notice. 

Otherwise, our industry is obsessed with ‘best rates’ which creates deep layers of complexity that takes considerable expertise to navigate. While this is mostly amazing and serves 99.9 per cent of people, not everyone cares. 

We get thousands of customers every month, stressed, distressed, and scared to death of missing out on their dream home. Most just want the comfort of an affordable deal approved, not hunt around for the cheapest rate going. 

Borrowers also lost something when the Financial Services Authority and Financial Conduct Authority stepped in – the option to be responsible for themselves. 

I’d design an unregulated, self-responsibility, mega mortgage, addressing certainty and affordability. 

A rate-for-risk ‘one mortgage’ approach, where all clients are approved and just given a deal that matches their situation. It might be an eight per cent rate, but if you don’t like it, try to get a better one elsewhere. 

And let some people self-certify where credit indicators and loan to value tiers deem that more viable. 

I’m not advocating 2007 and everyone having the power to ruin the country, but I do think there are savvy, experienced and sensible borrowers who are fully capable of making choices about the borrowing that suits them. 

Then if they default, it’s completely their own doing. The lender takes no responsibility whatsoever and they have no rights to compensation. 

Anthony Rose, director of LDNfinance 

As holidays abroad remain a distant dream for the time being, the holiday let market has simply exploded.  

The opportunity for savvy investors is huge but holiday home interest has grown so rapidly that products have been playing catch up – especially at the top end of the market. 

An issue with current holiday let products for high net worth (HNW) clients is the restrictions around how the property is going to be used.  

These typically fall into two strict categories to satisfy lender affordability concerns; those using the property as their personal holiday home and renting sporadically, or those primarily operating it as a commercial venture who’d like to stay there occasionally. 

But for HNW clients looking to purchase high value holiday homes, these restrictions don’t make much sense.  

The pandemic has refocused the fact that HNW individuals are after flexibility.  

They don’t want constrictive mortgage criteria that demands they let out the property for no more than a certain number of days a year. 

As such, we’d love to see a residential product whereby HNW clients have carte blanche as to how they use the property – their income and wealth structure being more than large enough to sate any affordability worries the lender may have. 

It would be aimed at those with a vast wealth profile who want the flexibility to buy a second home and use it as they see fit.  

Loans would be for mortgages over £1m and ideally on an exclusively interest-only basis as the property is not their primary residence. 

Howard Reuben, owner of HD Consultants 

Our core business is in the buy–to-let sector and our clients range from first–time buyers and first–time landlords, through to the experienced portfolio property investors with hundreds of properties.  

If we could develop one product, it would be a combination of all of the best features of varying existing products but wrapped up in to one proposition.    

With such a focus on tax planning and how much landlord tax has been hit over the last six years, flexible and variable features would be useful for our proactive and entrepreneurial property investor clients.  

I would love to see a feature which would enable family members to be added to a flexible, offset, portfolio buy-to-let product. This would also enable succession planning and management or mitigation of the inheritance tax issue.  

For the portfolio landlords who can deposit rents straight into the offset savings account, this would reduce the mortgage interest charged as the portfolio balances would offset against each other.  

In one stroke we have a product that has helped with tax, cashflow and future estate protection.  

The flexibility would also be there to enable quick drawdowns to buy other properties without the need for further fees and time constraints.  

Ultimately the product would be a ‘self-lending’ one. A low cost, low tax planning vehicle, enabling some kind of retaliation to the George Osborne devastation that was imposed some years ago.  

With a growing rental population and a desire in the property investor industry to support that, we still need the holy grail of all mortgage arrangements.

This week’s comment was in response to the story: Changing tax year means lenders can no longer put off self-employed borrowers – JLM.

Sox said: “It will surely be sensible for all lenders to still request the last three business bank statements, and I will certainly still be asking my clients for them.  

“I’ve heard recently of a case that declined because the client took out a government grant as advised by his accountant; despite the fact his business was doing okay for the last three months.”  

Sox added: “The reasoning behind this was when you apply for the grant, you have to declare that you are still suffering financial difficulties – which he technically was not.  

“You shouldn’t ‘have your cake and eat it’ but hundreds of people and businesses have over this period. I’m not sure the welcoming back of the self-employed with open arms will be quite as smooth as we would like.” 

So, this week Mortgage Solutions is asking: Have you had to step out of your professional comfort zone more frequently this year to find suitable solutions for your clients? 

Andy Wilson, director of Andy Wilson FS 

The pandemic has required advisers to step out of their professional comfort zones in some respects, but for me it was never around the advice I continued to give clients.  

The comfort zone I did need to step out of was the normal face-to-face meetings with clients.

I work in the equity release market, and for me, meeting my clients on their own territory, where they are most comfortable, has always been a mainstay of my business.  

So, having to resort to providing some aspects of advice by video calls was alien to me, and took a little while to adapt to. Fortunately, family quizzes each weekend soon taught me the capabilities of video calling. 

One potentially risky aspect of this was the inability to check whether the client had any vulnerabilities or not.  

Were they being coerced by family, in the room but out of shot? Were they feeling vulnerable due to financial pressures, health, grieving or other factors?

I think that sometimes clients on video calls may struggle with the format, and may not be quite as candid about their actual situation, whereas face–to–face allows us to bond with clients better and demonstrate more empathy and consideration.

When it became clear we could meet face–to–face again for work, I arranged this where the clients were comfortable and with appropriate Covid safety measures in place.  

I had a couple of meetings in delightful gardens during the summer, and others masked up and coated in hand gel. That was also a change to the process I was comfortable with, but I had to simply adapt like everyone else. 

Payam Azadi, partner at Niche Advice 

Most of the challenges were around remote working. 

Even though we were geared up for it with an existing cloud system, we obviously had a main office that we worked from. So we had to set things up to ensure staff could work in the same way from home. 

Beyond this, we’ve got to make strategic decisions about our working practices.  

Do we ever want to go back to the office and do our staff? Some people have had kids since the pandemic so that changes things. 

We also have to consider downsizing. As well as that, will staff be as committed to the business when working from home or will they think, ‘now I’m working remotely, I can work for any company, not yours’. 

We’re still figuring those things out. 

With clients, the more challenging parts are when you’re dealing with them and all of a sudden they go quiet. When you finally hear back, they say they caught Covid and have been in hospital, so the mortgage application has to be put on hold. Or they’ve been furloughed.

That’s difficult when you’ve been working on a case for a long time. 

Therefore we’ve had to be more understanding and compassionate. Not that we weren’t before but you could have someone self-employed, running a business for 10 years, making lots of money and they can’t get a mortgage.  

It’s a sensitive topic to approach because as far as they’re concerned, they’ve paid their dues but now the system is essentially telling them ‘no’. 

There are a lot of conversations where I have to gently tell them that I don’t make the rules.  

A lot of people feel hard done by, or feel that now their backs are up against the wall they’re not getting the support they should be.

So the challenges haven’t necessarily been due to cases placed, but more about how we deal with telling people that they can’t get the finance they want. 

Darryl Dhoffer, mortgage and protection consultant at The Mortgage Expert 

I’d like to say as advisers we need to encompass all areas. There’s still a lack of good brokers out there who embrace the likes of second charge loans, bridging or short-term finance when looking at refinancing. 

For me personally, I haven’t stepped outside of my comfort zone because I’m always looking for alternative solutions for clients. I’ve always been that way.  

Where one cap doesn’t fit, I’ll look at other options. 

What I have noticed is we have had to be more thorough and our planning has had to be more precise.  

Communication has been key – we’re all guilty of not keeping in touch with our old client base. We’ve had to try to keep communication lines open and that’s been at the forefront.  

We do this by making sure clients are aware of any new product release as soon as it comes out.  

As we specialise in adverse clients, where certain mortgages didn’t fit one month, we’re focusing on getting them back on board as soon as possible. So we’ll make contact when something suitable becomes available. 

We have to keep abreast, keep a diary, know where they’re at and keep communicating. 

This is especially important where clients are becoming more aware of the market. They are more savvy and switched on about what’s out there. 

Where they’ve had more time on their hands too, they can pay more attention to their finances and are happy to take time shopping around.  

It’s not a shoo-in anymore that clients will come back to you. We have to spend time to grab them more in advance than usual and talk to them continually.

Self-employed borrowers have been particularly hard hit over the last year, but as lockdown eases, the economy opens up and a new tax year arrives there appears to be light at the end of the tunnel.

So with lenders widening availability for employed customers, is this also happening for your self-employed clients?

Are product availability and criteria improving for self-employed borrowers?

Yes

No

Don't know

• Yes
  21.8%
• No
  60.5%
• Don't know
  17.7%

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