A quick guide to sourcing second charge loans

Maeve Ward, sales and operations director, secured lending at Shawbrook Bank, looks at the practical aspects of sourcing of secured loans.

It would be fair to say that sourcing systems have had a dramatic and transformational impact on the market over the past 30 years since their introduction. In this time, they have evolved significantly, shaped by regulatory and technological change and now deliver higher levels of functionality than ever before. However, I would add that this assertion should carry a few caveats.

Using a sourcing system in isolation is not the answer

No matter how sophisticated sourcing systems may be today in achieving a holistic real-time view of the market, they are not the complete solution in themselves. Due to the fact that the second mortgage market is a highly specialist area, related products are still far from fully represented on the major sourcing systems. You may have identified a potential opportunity for
a second mortgage introduction to satisfy your customer’s requirements. But how do you then go about researching that this is the most viable option in a capital-raising situation? Particularly when, as I hav eoutlined, coverage of the product simply isn’t readily available on the systems.

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Deal or no deal?

Specialised sourcing systems will take you only so far. Experience dictates that to be truly effective, an additional level of intelligence needs to be applied to a second mortgage referral – the human brain. This is the magical component that can make the difference to the progression of a deal or a decline.

It is vital to recognise that no single sourcing system caters for all of the possible permutations of customer profiles, such as additional income, credit scoring and bespoke purposes, for example. Yet, as we know, the key is to correctly capture and understand the needs of the customer in order to provide the best possible outcome. I am not advocating that we eliminate or
ignore sourcing systems, nor am I questioning the validity of these technologies in all business situations. In fact, where you have a customer in your office, sourcing systems can prove a useful role in researching potential secured loan choices. That said, they are no substitute for the experience and knowledge of a skilled market specialist.

Turn a decline into an application

In order to ensure the customer gets the right outcome, the human touch is vital. Above all, it enables you to ascertain that what is being presented is the very best option for the customer – and also allows you to turn a decline into an application. That is why partnering with a broker that offers both a system and an underwriting desk is best equipped to help.

After all, they are set up to provide a combination of experience and specialist market expertise. They know the lenders, understand the dynamics of underwriting secured lending transactions and also what can and cannot be referred. This has the result of accelerating the process and maximising your time – whilst providing an outcome that simply wouldn’t have been possible to the customer, where they are using systems alone.

If it were all about systems, then there would be no intermediary market!

As brokers, building lasting relationships and high levels of personal service are second nature and integral to everything you do. It is natural that you seek this approach from your partners. In this way, you can focus on what you do best, recognising and acting on opportunities, maximising the use of technology and the intelligence that this confers – and then speaking to skilled market specialists whom hold the relationships with the lender. All with one aim: to ensure that the customer gets the right outcome.

And here’s a word to the wise. Remember that the customer is always yours, so make absolutely certain that the broker you partner with offers a no cross-sell policy and that your contract you hold with them confirms who owns the advice in the application process.

The best of both worlds

We have seen that relying solely on a sourcing system can lead to lost opportunities, possibly limiting customer options or worst case, recommending a product that is very expensive. To avoid missed opportunities, there is a logical way forward: to combine the speed and processing power of sourcing systems with the sense and sensibility of human intervention and interpretation.