Indeed, often lender staff will take a ‘computer says no’ approach, leaving the client having to look elsewhere or accept that their preferred solution isn’t possible.
Whilst one understands that protocol has to be followed and rules are in place for a reason, surely a rigid approach which results in a customer receiving a worse outcome is not in the best interest of the borrower - and therefore not exactly adhering to TCF rules?
One scenario we see a lot is lenders refusing to take a third charge with clients then forced to settle debts they would otherwise prefer to leave in place.
As an example, we recently had a client who wanted raise £30,000 and another broker was forcing them to settle a £25,000 CCJ relating to a business debt which was non interest bearing and registered at land registry. This took the total borrowing to £55,000, all of which would have been at a relatively high rate due to the CCJ.
Thanks to the flexible approach taken by one lender we were able to leave the second charge relating to the CCJ in place – saving the client potential interest payments on £25,000.
Because they then only needed to borrow £30,000 they could afford to repay the loan over a shorter period which also reduced the total interest they would pay.
Innovative approaches and bespoke lending is what has always made the second charge market so useful. Let’s make sure we don’t lose that. Indeed, we should be applauding those smaller lenders which develop niche products and encourage innovation that provides better customer outcomes today and sets the precedent for mainstream lenders to consider scenarios such as this in the future.
Now that our markets are aligned, mainstream first charge lenders could start to reflect some of the practises in the seconds and specialist sector. And a more flexible, common sense approach is in everyone’s best interest.