In the Spotlight with Donna Johnson, Fluent for Advisers

We spoke to Donna Johnson, Business Development Manager at Fluent for Advisers, about when a second charge should be recommended over a remortgage and how technology will continue to evolve in the mortgage market.

Related topics:  In The Spotlight
Warren Lewis
17th February 2018
Donna Johnson Fluent
"Technology is key in what we do and as this continues to evolve it is making brokers’ jobs that bit easier every single day. "

FR: What advice would you give to brokers who are new to the specialist lending market?

First of all – don’t panic. The sheer scale of offerings from specialist first charge, second charge, bridging, equity release through to bridging and commercial lending can be overwhelming. However, packagers and master brokers are a wonderful resource either in helping with alternative choices from which to make a recommendation or in many cases helping referred clients by providing a full advice service, leaving you free to concentrate on your next client.

FR: In what cases should a second charge be recommended over a remortgage?

The regulator asks that advisers ensure that their customers are told about the second charge option but in every case any recommendation must be in line with what is right for the customer. 

Remortgaging is a strong option, but cases where a second charge could be a better option include where –

• The existing mortgage is too good to terminate 

• the client’s credit profile has deteriorated, 

• moving from an interest only to a capital and interest remortgage would increase monthly costs and adversely affect cashflow

• high ERCs on existing mortgage, the client wants to keep new borrowing short term and separate. There are many others.

FR: Fluent for Advisers recently predicted that the second charge market would grow “at a more measured rate” in 2018 – why do you think this is?

Our job at Fluent is to provide advisers with the reasons why they should consider second charge options. This was never going to be an overnight task. Advisers need to be reassured that second charge is a viable option and new business volumes from the intermediary sector were always going to be subject to the ability of the industry to make the case. There is still a lot of work to do and that is why growth will be steady and not dramatic.

FR: How will Brexit and a low Base Rate continue to affect financial services in the coming months? Do you think mortgage rates have hit rock bottom or will economic uncertainty push rates even lower?

Rates have been bumping along the bottom for a while now. There is only one way for them to go at the moment - up. The financial markets are globally linked and the end of ‘quantitative easing’ or printing money as it used to be called, will see interest rates rise as the threat of inflation increases. I don’t think there is any need for undue alarm as rises will be gradual and we certainly won’t see double digit rates of interest. Brexit will continue to cause uncertainty until we leave but I think the outcome will have less impact on financial services than some think. A change of government poses a greater threat than Brexit.

FR: How do you see technology continuing to evolve in the mortgage market and what are some of the positive and negative impacts you see of emerging tech?

Technology is key in what we do and as this continues to evolve it is making brokers’ jobs that bit easier every single day. Simply being able to compare a remortgage to a second charge has been a huge positive and has helped instil confidence among brokers when considering best advice to their clients. 

Our modern lending industry is totally reliant on technology and although that is quite frightening, the advantages of being able to do so much more online far outweighs any negatives. Who wants to go back to paper applications, paper ID proof and references and relying on the postal system? I know I don’t! 

FR: If you could see one headline about financial services in 2018, what would it be?

‘Second charge lending is now universally accepted in many cases to be the best advice for clients seeking to capital raise.’

Still a bit of a way to go!

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