Archive: Jun 2016
National Protection Sales Manager Bernie Buron explores several ways advisers can help make Income Protection more affordable for clients
Affordability is still one of the biggest consumer objections when talking about any kind of protection, but income protection in particular is such an underused yet common sense approach to covering finances, that breaking down the affordability barrier is especially helpful for clients.
Helping clients visualise the situation they would be in were they to lose their income is such a useful way to break down opposition to affordability when taking out income protection. Comparing the swift and stress-free claims process with the laboured and unreliable state benefits system can also highlight why income protection is such a good idea. But even when your client has recognised the benefits and the risk a lack of protection can bring, affordability can still remain an obstacle.
So in your client conversation, how can you help your clients work within their budget so that they don’t leave themselves open and vulnerable to worst case scenarios?
Deferred periods can be extended to help with affordability
Extending the deferred period on a policy will normally reduce the premiums, as it reduces the risk of pay-out for the provider. Of course as an adviser your priority is to protect your client as far as possible, which means recommending cover that starts from the moment they are no longer fully covered by their employer. But if affordability is still an issue, extending the deferred period so that your client is at least in some way covered is an option, as long as it is recorded in your client conversations and on your Reason Why Letter.
Budget income protection is a possible option
Clients should always consider longer term income protection first, as this provides the most cover. But there may be circumstances where affordability has become enough of an issue for budget income protection to become an option. This option may also better suit those on zero-hour contracts and agency workers, as their employer most likely has no legal obligation to cover their income if your client was unable to work. Most providers will limit the pay-out time to 24 months.
Menu plans can help tailor protection to your client’s budget
Menu plans are available with most of the big providers and can be a really useful and convenient way to arrange all your client’s protection to suit their circumstances and their budget. Not only do they allow you to mix and match products and tailor protection to your client, but when it comes to claiming, having all their products with one provider can deliver that added peace of mind and convenience at a difficult time. Menu plans can also help advisers discuss options and maximise cover within the ascertained budget. If affordability is still an issue, you can record this and then discuss scaling back some of the benefits, whilst still maintaining the core cover products.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
Head of Compliance Steve Adams reveals his highlights of one of our latest MI Online webinars. The event saw Paul Kane, NatWest Corporate Account Manager, explore not just the link between a rising BTL market and the potential for fraud, but what you as an adviser can do to protect yourself
Advisers love our MI Online series, delivering great ideas and useful insights into many areas of the industry. One recent webinar, hosted by NatWest Corporate Account Manager Paul Kane, explored the relationship between a rising BTL market and the potential for fraud. Paul also highlighted exactly what you as an adviser can do to protect yourself. In case you missed it, here are my key highlights from the session:
Potential business means potential fraud
Most of the recent industry debate has been focussed on the future of BTL after the 2016 stamp duty changes and the upcoming changes in tax relief. This is understandable, considering the potential impact and controversy on its benefits.
BTL is also the fastest growing sector, supported by low interest rates and population growth during a shortage of housing that has put increasing demand onto the sector. BTL applications have increased dramatically since 2011, but it is still predominately an amateur sector, with 63% of landlords owning only one property, despite what some media outlets suggest.
But it is exactly this increase in business levels and public focus that both distracts from potential fraud and attracts certain dangers, which is why ensuring that a strong fraud focus is maintained within the industry has never been more important. Potential business can often mean potential for fraudsters as well.
How does fraud tie in to the BTL sector?
It is important to know some key BTL fraud definitions beyond the broad meanings of Mortgage Fraud and Money Laundering. Mortgage Fraud is defined as “a crime in which the intent is to materially misrepresent of omit information on a mortgage application to obtain a (larger) loan than would have otherwise been obtained had the lender or borrower known the truth.” This can be split further into two categories: Fraud for property and Fraud for profit.
Differences in criteria means that BTL fraud is typically classed as Fraud for Property rather than Fraud for Profit, as it is quite normal for interest-only mortgages to be taken out on BTL. Attempting to get a mortgage on an interest-only basis may be a reason why people might be intending to misrepresent themselves and conceal their intentions.
This situation can attract fraud because interest-only is more common and affordability is not as strict on BTL, which may attract those wishing to not pay back capital on their mortgage. This can also attract organised criminals who are not interested in the property itself and simply want access to the lender’s funds.
There are also instances of Fraud for Profit, where professional, organised criminals engage in mortgage fraud simply to abscond with the mortgage proceeds and do not have a preference for a particular mortgage product. In any case, they do not have any intention of making repayments and will typically use false identities, sources of deposit correspondence and bank statements to support the application.
How can advisers protect themselves against fraud?
There are many ways in which advisers can protect themselves against potentially fraudulent activity. Undertaking due diligence is key to this, such as checking documentation and payslips from the applicant. Now that the days of poor quality photos and easily-identifiable obscurities have passed, advisers need to be even more vigilant to ensure they are able to clearly spot potential fraud. Knowing how license numbers are structured can be an example of this, as well as ensuring it matches with the other client details.
Checking the details on bank statements and knowing the expected format can also help confirm validity. There should always be a professional appearance to the statement, with no spelling errors, anomalies or suspect details, as well as showing the correct address as the expected residence.
Ask yourself: Do the credits match those on the payslip? Are they from the correct employer? Are they the right type of payments such as BACS etc? Does the activity on the statement match the current customer profile? Are they recent documents, and if not why can the applicant not provide a more up to date one?
What more can advisers do about fraud?
Working with lenders, networks and each other is a really important step in protecting yourself against fraud. Also, if you have had business introduced to you, ensure that you know as much as you can about them and have asked the right questions to protect yourself. Have you visited their premises? How long have they been in business and what is their reputation? Does anything appear suspicious? In other words, fact find your introducer in the way you would your clients.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
Bluestone Mortgages has today announced its latest distribution expansion, partnering with network and mortgage club Mortgage Intelligence. The new partnership will see Bluestone Mortgages’ products and solutions on offer to all network appointed representatives and directly authorised mortgage club members.
Bluestone’s collaboration with Mortgage Intelligence is the latest in a number of distribution agreements since its pilot launch into the UK specialist lending market in October 2015.
Matt Andrews, Managing Director, Bluestone Mortgages, commented:
“We are very pleased to announce another successful distribution partnership, this time collaborating with Mortgage Intelligence. We value finding suitably qualified partners through whom we can expand our product and service offering and Mortgage Intelligence was a natural choice. With this latest partnership, we intend to build on our collaborative relationship with brokers, which will help us shape and develop our business, in readiness for a full market launch to help close the gap of UK consumers who are currently underserved by mainstream lenders”.
Sally Laker, Managing Director, Mortgage Intelligence, commented:
“We are excited to be welcoming Bluestone Mortgages to our ever expanding panel of lenders. As a company that’s committed to meeting the needs of our members and their clients, the decision to add Bluestone Mortgages, a specialist lender that prides itself on innovation and transparency, was a natural one.”
…ends…
Notes to editors:
About Bluestone Mortgages
Bluestone Mortgages is a specialist lender, passionate about helping customers who are underserved by the UK high street banks. Providing innovative, affordable mortgage solutions, delivered with a straight talking, transparent and honest approach.
Bluestone Mortgages is part of the Bluestone Group which was founded in 2000. Bluestone is fast growing multinational financial services business with offices in the UK, Ireland and Australasia.
The business is owned by a mix of private and institutional shareholders including LDC, Australia’s Macquarie Bank and the management team.
Media enquiries please contact:
Sophie Placido
Account Director
Rostrum
0207 440 8678
s.placido@rostrum.agency
About Mortgage Intelligence Holdings: Mortgage Intelligence Holdings was acquired by Countrywide in April 2011, the UK’s largest mortgage broker and property services Group. The following brands operate under Mortgage Intelligence Holdings.
Mortgage Intelligence and Mortgage Next: Established in 1996, Mortgage Intelligence, which merged with Mortgage Next in 2009, has become one of the UK’s leading mortgage networks. They offer award winning mortgage and insurance services to over 400 appointed representatives. Both networks focus on high quality of service and support offered to their intermediaries.
FYB Network: Mortgage Intelligence Holdings acquired Life and Easy trading as FYB Network in September 2012. FYB’s brand joined Mortgage Intelligence and Mortgage Next brands under the umbrella of Mortgage Intelligence Holdings Ltd. They offer both mortgages and insurance services. They were originally founded in 2004 and became a fully authorised network in May 2007.
Next Intelligence: Next Intelligence launched as a new brand in April 2011, bringing together Mortgage Intelligence and Mortgage Next’s directly authorised clubs which were both established in 1996. They offer premium brokers services to over 3500 mortgage intermediaries including mortgages, general insurance and a new protection panel which was launched in September 2011.
For more information about Mortgage Intelligence, please contact:
For media queries, please contact Countrywide Press office, +44(0)7721 439043
National Protection Sales Manager Bernie Buron highlights some worrying figures surrounding a lack of protection for tenants
Concerning research from a YouGov poll has revealed that almost five million tenants in the UK have no protection of any kind in place to cover their rent payments if they became too ill to earn for three months or more. This is on the back of recent cuts to housing benefit, which means tenants and landlords are even less protected than before.
According to the YouGov survey commissioned by provider Royal London, over a quarter of tenants know someone who has struggled to pay the bills. But that was not the only surprise the survey revealed. More than a third of those surveyed also said that they had no idea how long they could survive on their savings, with 60% of people admitting they would only survive for three months or less.
Fewer than one in ten tenants in paid employment have even spoken to a financial adviser about their finances. Instead, the most common place they turn to for advice is family and friends. Debbie Kennedy, head of protection for provider Royal London Intermediary, highlighted that a raft of cuts to housing benefit meant that more tenants would not get their rent paid for if their income was suddenly reduced though not being able to work.
Experts predict that the private renting market will increase over the next 10 years, rising to 59% of 20-39 year olds. As the survey revealed that 39% of people would dip into their savings if they were struggling to pay the rent, it is even more important for tenants to protect themselves against the worst case scenarios, as all their hard work saving for a house deposit could be quickly undone.
Kennedy also warned: “tenants who assume that housing benefit will be there when they need it could find the reality is very different … Income protection may be more affordable than people realise and can provide a financial safety net and enable people to focus on getting better”.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.
Mortgage Intelligence have added Kent Reliance to its panel of mortgage lenders.
Part of OneSavings Bank, Kent Reliance will provide Appointed Representatives, and Directly Authorised members, another solution for placing complex Residential and Buy to Let cases.
Committed to developing a competitive proposition that meets the needs of both adviser and client, the decision to further strengthen the panel was based on recent market research and an influx of enquiries outside of mainstream criteria.
Aside from a flexible approach to lending, Network and Club members will benefit from a competitively priced product range and direct access to a team of product and technical specialists.
Sally Laker, Manager Director, commented: ‘At Mortgage Intelligence we pride ourselves on meeting the needs of our advisers and their clients. With this in mind, it is important we have been able to respond to market conditions and add Kent Reliance , an established and award winning specialist lender, to our lending panel.’
Adrian Moloney, Sales Director, OneSavings Bank added, “Our distribution footprint continues apace in 2016 with the latest key addition of Mortgage Intelligence onto our broker panel. We look forward to working with Mortgage Intelligence and its members to help them maximise the opportunities our award winning specialist mortgage range can bring to their clients. Our national network of business development managers will help them every step of the way in providing flexible and better value specialist mortgages to help their landlord clients meet the needs of the UK’s growing private rental sector.”
For more information about Mortgage Intelligence, please contact:
Christine Webb
Countrywide plc
07721 439043
About Mortgage Intelligence Holdings: Mortgage Intelligence Holdings was acquired by Countrywide in April 2011, the UK’s largest mortgage broker and property services Group. The following brands operate under Mortgage Intelligence Holdings.
Mortgage Intelligence and Mortgage Next: Established in 1996, Mortgage Intelligence, which merged with Mortgage Next in 2009, has become one of the UK’s leading mortgage networks. They offer award winning mortgage and insurance services to over 400 appointed representatives. Both networks focus on high quality of service and support offered to their intermediaries.
FYB Network: Mortgage Intelligence Holdings acquired Life and Easy trading as FYB Network in September 2012. FYB’s brand joined Mortgage Intelligence and Mortgage Next brands under the umbrella of Mortgage Intelligence Holdings Ltd. They offer both mortgages and insurance services. They were originally founded in 2004 and became a fully authorised network in May 2007.
Next Intelligence: Next Intelligence launched as a new brand in April 2011, bringing together Mortgage Intelligence and Mortgage Next’s directly authorised clubs which were both established in 1996. They offer premium brokers services to over 3500 mortgage intermediaries including mortgages, general insurance and a new protection panel which was launched in September 2011.
Head of Mortgages and Insurance Stephanie Charman takes a look at clients with adverse history and what advisers can do to help them
There are many reasons why a client may have an adverse credit history and may need to consider a more complicated borrowing scenario. Knowing who you can turn to help your client in these circumstances is very important and we want to help you find the right solutions for your client wherever we can.
Why might clients with adverse credit need helping?
Someone with adverse credit will most likely have something on their credit history that could mean a regular high street lender will not want to lend to them. A low credit score can be detrimental when looking to borrow. This can be caused by something as simple as not being on the electoral roll, missing a bill payment or not having an established credit history, which is why helping your clients get ‘mortgage ready’ is really important.
Recent adverse is much more damaging to the client’s credit score as most lenders consider any adverse which is over six years old. Your client may also need to remortgage to consolidate existing credit, which may help them with their credit score in the long term but should be considered alongside other potential options. Bad credit also affects both parties if your client was named on an agreement that has caused adverse credit history, regardless of which party has caused the issue.
Who and what can help clients with an adverse credit history?
As we all know, bad credit can be repaired. This can normally take two or three years, depending on the severity of the adverse credit, and some clients may have already attempted to repair their credit using credit cards, small loan, or a finance arrangement.
Some specialist lenders do not even use credit scoring on prospective borrowers, although they will still examine a client’s file. Some lenders that do this are Magellan Homeloans, Precise Mortgages, Kensington Mortgages and Aldermore. Some other main lenders will also look at mild adverse but still credit score. Positive Lending can also be used for second charges and on some adverse borrowing needs.
BTL lending is really tough on those with adverse credit, especially when the credit is caused through previous arrears, defaults, missed payments or CCJs. In this case, Precise Mortgages may consider the client under some circumstances.
If you would like to know more about how to join our award-winning Mortgage Network as an appointed representative or becoming a member of our Mortgage Club, call our Broker Support Team on 0845 130 7446, option 1.