Packager TFC Homeloans has joined forces with Equifinance, adding the lender to its second charge mortgage lender panel.
The full range of Equifinance second charge mortgages is available to brokers, plus they will benefit from TFC’s specialist experience and support. The lender takes a fresh approach to seconds, assessing each application on a case-by-case basis and working with clients with a history of adverse credit to find funding solutions.
Nigel Payne, managing director of TFC Homeloans, said: “Equifinance is a great addition to our second charge mortgage panel, with its sensible, individual and refreshing approach to underwriting. Combined with its high service standards it offers a compelling proposition to brokers and clients.”
Tony Marshall, managing director of Equifinance, added: “We are delighted to be included on the TFC Homeloans lender panel and look forward to working closely with Nigel and his team.
“Equifinance helps people who have experienced historical financial problems but who are now on the road to recovery or where we can assist them in that process. Being added to the panel at TFC Homeloans is another positive step towards our ambitions in 2017 and beyond.”
What do the rising number of CCJs mean for the mortgage market?
There is not much that surprises me nowadays but recent figures on the number of CCJs awarded last year did. It is not the fact they have been rising that caught me off-guard, but the sheer scale of the jump and what it means for the adverse credit mortgage market.
There were more CCJs against consumers in England and Wales last year than in any other year on record, according to the Registry Trust. At a whopping 912,389, that is a 24 per cent increase on 2015 and the fourth year in a row in which they have risen.
And this is not the only indicator of a latent demand for adverse credit deals. Bubbling underneath is the huge rise in unsecured debt, which reached its highest level in December since the credit crisis, according to the Bank of England.
Citizens Advice helped 435,000 households with problems in managing their essential bills – 45 per cent more than those with consumer debt problems. In other words, the difficulty with managing household expenses is starting to push people to borrow more.
Anecdotally, brokers are also reporting a rise in the number clients with adverse credit, and we all know of the ‘just about managing’ households that could be tipped over the edge by a rise in interest rates.
Many of these households are sitting on low-rate mortgage deals or taking product transfers where they do not need to be credit scored again. Keeping their heads above water, buoyed by ultra-low rates. But it could only take one wave to knock many overboard.
Taking the opportunity to boost your knowledge of the adverse credit lending sector seems like an obvious business opportunity. Or you could partner with a packager that is already there.
This is not a return to the bad old days of sub-prime. Firstly, there is no self-cert in the mix and, secondly, lenders need to stress-test affordability.
But adverse credit is growing and could rocket in the coming months and years.
More of your clients will need specialist advice – preferably before interest rates rise.
When a couple with no experience decided to build a couple of houses in their back garden, finding funding wasn’t straightforward, says Danny Robinson, commercial director of TFC Homeloans.
Development business is our bread and butter in the London office, and much of it is big ticket, often involving experienced developers.
But not always.
A recent case involved a couple who decided to build two properties to let in their back garden. They also happen to own the house adjoining theirs, which they let out to tenants.
The clients, based in Romford, are lucky to have a big parcel of land, which is currently in use as their back garden.
But they saw a more profitable use of their green space – and who can blame them?
The rental market in Romford is red hot at the moment, recently taking top spot in an index of UK buy-to-let hotspots, and it’s becoming very difficult to buy an investment property in the area.
The couple had already split the title in order to build two homes, got planning permission, found a builder and approached a broker for help funding the development.
Possible but pricey
The broker didn’t know much about development funding but the builder recommended a large well-known firm to lend the money. They agreed, but the rates offered were sky-high.
He didn’t know any other lenders who would accept the deal because the couple have absolutely no development experience, which makes lenders wary. Also, lenders often don’t like a client to have a buy-to-let next door to their residential property, and they don’t like a high concentration of buy-to-let properties on top of each other.
So, the case wasn’t easy but there were still specialist lenders who will do it – for a price.
Thankfully the broker contacted TFC to see if we could look at alternatives.
Cost slashed by two-thirds
We searched the market and took the case to a small building society where we have managed to get a development rate at 0.5% a month.
This is three times less than the rate the clients had been quoted by the large well-known firm.
The building society worked closely with us to underwrite the case, including asking for details of which building contractor was being used and their track record. After all, they would be doing the work, and have a lot of experience, even if the clients don’t.
Another thing in the client’s favour was the fact that they have already split the title on the land and got planning permission, so the land proposed for development has some inherent value. This means they can get a day one withdrawal of funds, instead of having to fund the initial stages of development themselves.
The clients now have a development loan over two years, with six months’ contingency built in and day one release of funds. Once built they intend to refinance onto two buy-to-let deals. All in all, a massively better deal than the one previously on offer, which will save them a fortune.
Like the clients, the broker in question didn’t have experience of property development. And why should he? You can’t be experts in every sector of the market and you have to focus on whatever is your bread and butter.
Luckily there are specialists, such as TFC, who can help you not only find funding for those complex cases, but secure the best possible deal for your client. That way they stay happy, remain loyal to you and the deal goes through smoothly and successfully.