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In this guide
Second charge sourcing is fully integrated into Sourcing Brain to enable the ability to source on these products, for both residential and buy to let, either by comparing them to remortgage deals or sourcing them on their own.
The market allows for two routes for brokers to obtain a second charge – either via a master broker (these are typically non-advised although some master brokers offer advised products too) or direct to lender, which are advised.
Our system caters for both options, although the market may change so there may be a requirement to adapt these filters in the future.
Start Tab
Within the Start tab, when the remortgage option is selected, this will, by default, switch on the ability to source on second charge products as well. The ‘advised’ checkbox is used for second charge product retrieval, either on their own or with remortgage products. If the ‘advised’ checkbox is switched on then this will retrieve all advised second charge products. If the ‘advised’ checkbox is switched off, then this will retrieve all non-advised second charge products. Similarly, if only remortgage products are to be sourced, the ‘Include Second Charge’ option can be unselected.
If second charge products only are to be sourced, then this option is also catered for by selecting the appropriate radio button, again there is an option to source on non-advised or advised products as required.
When remortgage and second charge products, or just second charge products, has been selected, then within the Current Mortgage section, the client’s current outstanding balance for their existing mortgage and the client’s existing monthly payment must be entered. This is to enable the software to calculate whether it would be more suitable for the client to remortgage for the new loan amount or continue with their current mortgage and take a second charge.
Both of these fields are mandatory, for second charge products, and therefore a figure has to be entered before continuing with sourcing.
If the client’s current lender has been selected within the Specify Current Lender box but they do not allow a second charge to sit behind them, a warning message will appear.
Once the message has been acknowledged, the filters can be amended and sourcing can continue but obviously not for a second charge product.
Sourcing Tab
Moving into the Sourcing tab, the information already collected is automatically carried over. In this remortgage and/or second charge scenario, the total loan amount should be entered into the Loan Required box, being the client’s current outstanding balance plus the extra that they wish to borrow. The text under the loan required box confirms that the figure includes the additional borrowing amount.
The software can then calculate the LTV on the property price and loan required.
This screen also shows the term is now calculated in years and months.
The Scheme Status section allows the ability to first review whether a remortgage deal would be best for the client and then review a second charge option using the multiple source function which is a standard feature within the software.
Client Details Tab
The client details tab allows the collection of the current start date for employment for both Applicant 1 and Applicant 2. This is important for second charge sourcing as lenders will specify the minimum length of time in current employment. Although more relevant to the second charge market, the box will be seen for residential and BTL sourcing as well.
Product Details Tile
Another filter which is very useful for remortgage and second charge sourcing, is the Remortgage Reasons options. This will automatically default to Not Specified, but it is useful to select a reason for the client’s request so that the products are filtered accordingly. The majority of second charge lenders will accept debt consolidation, hence this option is chosen for this scenario.
Once all the filters required have been applied, the default setting, in the Scheme Status section on the Sourcing tab, is to review Remortgages first will be chosen. Click on the Results button to first look for remortgage products.
Scheme List > Remortgage products (first source)
Having chosen the remortgage option from the Schemes Included section in the Sourcing tab, the remortgage products are displayed. The initial monthly payment is for the total remortgage amount.
There is a calculated column called Interest, fees & ERC over N years. This column shows the cost over N years including the full cost of the added fees with interest, so this figure will always be higher if you add fees to the loan - unlike the Cost inc/ex ERC figures. This column applies equally to first and second charge products. This value is the sum of the initial fees (whether added or not), the interest on the loan and on any added fees, the ERC (if there is one) and the final fees. It is everything that you have to pay apart from the repayment of the original loan amount (before any fees are added).
For the remortgage scenario, the Show Details button on the right hand side of the scheme list allows you to display details and fees and rates on the product highlighted. The Details section displays the monthly payment for the schemes in the list and also confirms the client’s existing monthly payment and existing mortgage on their current loan.
The fees & rates screen is ‘dynamic’ which means that only fees that are required for the product will be displayed – there will never be any fees or fee names shown as 0 in this section. This applies to all first and second charge products, whether residential or buy to let.
Scheme List > Second charge products (second source)
So having reviewed the remortgage deals, the New Search icon on the top tool bar allows the remortgage deals to be retained whilst second charge products are sourced alongside it.
This function returns back to the Sourcing tiles where the second charge radio button can be selected.
Other filters can also be applied, terms changed if necessary, etc. Once selected, click on Results to go back to the scheme list, this time with the second charge products that fit the client’s requirements.
So now second charge products are displayed – the software has still retained the remortgage products that were sourced previously, and these can be accessed by using the Source 1 and Source 2 tabs displayed on the top left hand corner of the screen.
The functionality on this screen is exactly the same for second charge products as it is for residential or buy to let products. The second charge lender names and master broker names are displayed in the lender column on the left hand side.
There are also a few columns specific to the second charge scheme list – Combined Initial Payment; Combined cost inc fees & ERC (n yrs); Combined cost inc fees ex ERC (n yrs) and Master Broker fee. The ‘combined’ columns all contain the client’s existing mortgage details in the calculations. For example, the combined initial payment takes into account the client’s existing monthly payment, which was entered at the outset within the current mortgage details) plus the monthly cost of the second charge loan.
The Details tab, accessed through the Show Details option on the right hand side of the scheme list, also shows some differences for the second charge scenario – the title Secured indicates the type of product that is being reviewed, the other information is specific to the second charge product plus the confirmation details of the client’s existing monthly payment and existing outstanding loan. In the Second Charge section at the bottom it confirms the DTI ratio and also the minimum current employment information.
Multiple Tab Function
With the Multiple Tab function, there is a limit of 10 searches that can be created with different scenarios for the client, such as different terms; different payment types; different loan amounts; different filtering etc. Each of the tabs is displayed across the screen as you can see. To check the criteria for each of the searches, simply hover your mouse over each tab title (Source 1, Source 2, etc) and this will display a list of the criteria applied to that particular search.