BrokerJun 27 2018

Ignore mainstream players for complex needs and pay the price

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Ignore mainstream players for complex needs and pay the price

A borrower with a complex set of requirements does not have to result in a complex process for brokers.

Increasingly, lenders are recognising the need to adapt their products and systems to work with those cases which, in the past, may have thrown a spanner in the underwriting works.

Communication is the key factor when it comes to a good relationship between brokers and lenders, and is imperative when it comes to handling those applications that could result in a few headaches along the way.

Simplicity

A vital stage for an adviser is making a call to their business development manager (BDM) in the first instance. That allows both sides of the deal to understand what can be done and get to the heart of what the problems could be.

Making the process simple for the client first time around stands brokers in good stead to retain business, once their product matures.

Existing customers are the lifeblood of any business.

Other measures, such as assigning a dedicated underwriter to each case, can help to form a trusting partnership that works for everyone. 

Each complex case has its own characteristics, but it is possible to draw some common themes which intermediaries and lenders should all have in mind when assessing cases: being willing to make time to ask and consider difficult questions, looking for sensible solutions to problems that might, at first look, insurmountable and trying to make the process as easy as possible.

Key points

  • Lenders are adapting their processes for complex cases
  • Wealthy clients can be challenging cases
  • Mainstream lenders have worked hard to shed the ‘computer says no’ image

Wealthy clients can present unique challenges. For example, say your client works in the City and, although they earn a good salary, their bonuses far outweigh their comparatively modest income.

This is where some lenders’ affordability criteria might struggle and the client’s adviser can take a proactive approach of liaising with BDMs and underwriters.

Of course, lenders should always take a prudent approach to borrowers whose bonus is higher than their salary; however if your client has a three-year track record of consistent income, for example, you have got the evidence you need to be confident the client will be able to meet the repayments.

Another example is a recent case involving a broker with a fund manager client in exactly the same higher bonus situation who wanted to borrow above a £3m lending cap. It proved to be a text-book example of when early communication and flexibility can really pay off.

The broker supplied all the documentation the underwriter needed to agree to a £3.9m mortgage with all the perks of any standard mortgage. 

Barristers are another group of borrowers who can find it tricky to get a mortgage with a traditional lender because of their unusual income patterns.

Most are self-employed; they have variable earnings and cash flows can be restricted by lengthy cases so proof-of-income can be difficult to provide.

However, there are ways around this. Lenders could accept a letter from the Barristers’ Chambers of a projected income rather than the usual self-assessment form. 

In the past, some intermediaries used to view contractors as a bit of a gamble and shied away from lending to them. And in these cases there can be a lot of paperwork for the broker to deal with.

When you are dealing with a client who has a complex profile, it can be tempting to go straight down the specialist lender route, bypassing the traditional brands for fear they will not have the flexibility you need.

As well as good communication channels with their underwriter, more and more lenders are trying to help brokers by allowing them to upload everything they need for the application in one go is vital. 

There are resources advisers can access to quickly cover some of the basic questions on lending requirements.

Many lenders provide basic checklists of everything needed to start processing an application, or criteria changes for different types of clients. For example, if your client is a self-employed accountant, there may well be a variation between the documentation needed depending on what qualifications they hold.

On the other side of the fence, lenders need to prove that they really are on the side of brokers, rather than just paying lip service.

Proactive measures, such as empowering underwriters to contact brokers direct to discuss their case, always help to demonstrate this. It is another way underwriters and BDMs can identify issues early on and find the best solution.

However, in today’s hectic world, a telephone conversation is not always the easiest way to communicate, especially when you are working out of the office or have documents to discuss.

Alternative ways of keeping each other updated, such as a secure webchat facility, can be crucial in outlining the particulars of a borrower and providing paperwork to back up the case. 

In the past, traditional lenders have had a reputation of having rigid requirements, but the industry has worked hard to shed that ‘computer says no’ image and improve solutions for both brokers and borrowers.

It is vital to take a commonsense approach when it comes to underwriting and making lending decisions.

Most importantly, lenders need to work with advisers at every stage of the application to make sure their case is processed quickly and accepted for the best deal to suit the client’s needs. 

Profile

When you are dealing with a client who has a complex profile, it can be tempting to go straight down the specialist lender route, bypassing the traditional brands for fear they will not have the flexibility you need.

But that could lead to missing the best deal for a client and ultimately undermining what could be a fruitful long-term relationship.

Brokers do not need to be told how important reputation is in our industry.

Those clients who present complex cases can become advocates of your business and your brand if you can secure them a good deal despite the difficulties they present. One happy client can quite easily lead to a handful of successful cases. 

It really is worth taking that extra bit of time to check if your case could fit with a mainstream lender, before going down the specialist route.

Jeremy Duncombe is director of intermediary distribution at Accord Mortgages