Phil Whitehouse, head of TMA, wonders if there is such a thing as ‘more than a mortgage’ club.
Has the name mortgage club become something of a misnomer? Maybe not, but it certainly doesn’t tell the whole story. It is true to say that these days mortgage clubs offer a lot more to their members than access to exclusive mortgage products.
When mortgage clubs were first formed they were exactly that, clubs that offered access to mortgage products to the intermediary market. Nowadays though, many clubs have realised that the success of their member’s businesses is the key to their own success and as such have diversified and have been putting ancillary income providers on their panels for several years. It is no longer enough to negotiate great mortgage deals and proc fees, the real success comes from adding value and that’s where a good mortgage club will come into its own.
As mortgage lending has become more difficult for obvious and well documented reasons, it makes sense for brokers to be able to offer a broad range of products. Their business proposition then becomes more complete, providing a better service and offering real solutions for their clients in a testing market.
With so many complimentary or niche products available mortgage clubs are in a great position to negotiate with providers on behalf of intermediaries. mortgage clubs therefore have been making strategic arrangements with other income providers and found ways of promoting their products to members. Getting the best deals for their members’ clients is an obvious benefit, but one advantage that may not be immediately considered is saving time for the intermediary.
Offering complementary or alternative products can be a daunting task for intermediaries especially if you’re doing it independently. The whole vetting process takes time which if the provider is found to be unsuitable is a waste of resources and costly. However, using mortgage club connections brokers have the confidence that the suitability of each provider has been checked and each firm vetted, therefore freeing up valuable time for the intermediary to concentrate on their core business.
Ancillary service providers such as life assurance, general insurance, secured loan, commercial lending and conveyance companies all have very different ways of working.Sometimes products can be accessed directly with the provider, but on other occasions or with different companies it will have to be done through a third party packager or specialists like secured loans master brokers. Getting to know how to approach each provider and the systems they use is again a time consuming activity and one that most brokers just don’t have the time to do. The experience and contacts that a mortgage club can offer here is most definitely a valuable asset to a broker’s business.
Traditionally mortgage club panels had a spread of all lenders that they could negotiate favourable terms with. More recently though money for mortgage lending has been harder to come by so providing access to other smaller or niche lenders and specialist third parties is exactly the added value that brokers are looking to their club to provide.
We recently had an example where a third party specialist was able to negotiate with a small lender to give our members access to pot of money, in limited tranches, that they might otherwise not have been able to get to. In the current market, smaller lenders are generally more wary of distributing through a mortgage club, because the large volumes of business could potentially put their resources under pressure. However, we have found that these lenders often have trust in smaller organisations that can control distribution of their products to a limited number of intermediaries.
Mortgage clubs nowadays are also able to limit distribution to smaller groups of intermediaries and are constantly seeking out and investigating the possibilities of such partnerships on behalf of their members.
The value of working with a good mortgage club cannot be over-estimated and this also occasionally means linking with third party specialists to give intermediaries extra tools so that they are more able to meet all their clients’ varied needs, which is vital for a successful business.