July 27, 2011
Remortgages, Mortgages And Secured Loans Arranging No Longer Allow A Broker Much Income..
It is only natural for people to be very interested in other people’s wages.
The same holds true when talking about remortgage, mortgage and secured loan brokers. It seems to be quite a good job to be in, but some people are uncertain whether wonder if these people earn enough money.
Prior to the credit crunch the profit to be made by being a secured loans broker was more than fair as the commission paid by loan providers to the broker for introducing business was perfectly reasonable..
Until 2006 before the dreaded recession there were a good selection of secured loan lenders offering a vast array of products including self declarations of income for self employed applicants, 125% equity plans where by the secured loan applicant could obtain a secured loan of 25% above the value of the property, and secured loan brokers arranged all these secured loans through the numerous lenders.
It was a case of the lender and the broke depending on each other.
However since 2007 the number of secured loan lenders has gone down yo a handful with many of them going out of business..
Future Mortgages was one of the first to shut its doors mainly due to the fact that it was part of an American group who suffered dramatic losses in America through its involvement in the sub prime mortgage market.
The underwriting of some of the secured loan lenders was so lax, and it was these practices in the banking industry in general that contributed to the credit crunch.
The secured loan industry at the end of 2009 is a very different industry than it was pre credit crunch, underwriting has been tightened and so has the commission paid by the secured loan lenders to the secured loan brokers.
Nowadays the commission paid to the brokers is only 1% of the total loan value meaning that for a 10,000 loan the secured loan broker would receive 100, which is not adequate to maintain an office, staff or anything else for that matter.
There are a number of processing costs to pay such as to pay the mortgage lender for answering a questionnaire regarding the conduct of the prospective secured loan borrowers mortgage account. A surveyor also has to be paid for carrying out a valuation on the property being offered as security,
The commission he receives does not even cover the costs of arranging the secured loan, and therefore the only way that a secured loan broker can make a living at present is by charging fees.
The incomes of mortgage brokers is now pretty much at the level that it always was with the mortgage broker receiving fees from the building society of about 0.030 of the value of the mortgage or remortgage.
Stop by Champion Finance’s site where you can find all the information you need about remortgages for your needs.
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