Welcome to the newsletter from HomeLoan Partnership, designed to keep you up to date with topical market news, sales ideas for your business and developments in the HomeLoan Partnership proposition.

The latest tactic of lenders looking to ration their lending funds emerged over the past few weeks in the form of 'dual priced' products - mortgages direct from the lender at cheaper rates or on preferential terms and unavailable to mortgage brokers.

Notwithstanding the historical risk issues, you have to view the credit crunch as an opportunity for lenders to raise fees and interest rates, strengthen criteria and improve loan quality. You add to this reduced procuration fees and restrictive products and their own prospects seem pretty good.

This caused a backlash of comments from brokers (that in the past have generated up to 70% of lenders business) and led the Association of Mortgage Intermediaries to be uncharacteristically critical of both the regulator and the lenders involved. HomeLoan Partnership have made our own representations to the regulator about the inequality between this stance and that applied to other financial products.

Guidance was sought as to how an independent mortgage broker could best serve the needs of their clients without access to these products. The regulators response was to suggest that brokers should advise clients that cheaper products were available elsewhere and offer to charge them a fee for this advice!

The dialogue rumbles on and there has been a little evidence of the difference between deals softening but there is no doubt that the average broker is suffering as a result.

  So what practical steps can you take to survive?

Firstly, be aware of the products that are available, the FSA's own website money made clear contains many of these direct deals so you can research the market yourself.

Consider charging the client a small fee for managing the mortgage process if the right deal is one that you have to pass them directly to a lender to obtain. This is quite reasonable on the basis that you save the client walking the high street trying to choose a mortgage where they have little chance of comparing penalties, overhangs, fees etc

Agree with the client that you will provide this help if they do their life assurance cover, ASU, MPPI and buildings and contents insurance with you rather than use the restrictive products from a typical lender.

Lastly, make sure that you have other products and services that you can sell alongside or instead of mortgages until the lenders realise that they are biting the hand that feeds them.

Selling life assurance is all about establishing a risk for a prospect, creating the desire to deal with it and presenting a suitable solution. Those advisers previously from a direct sales background would have heard this euphemised as 'Back up the hearse and let them smell the flowers!'

More recent entrants to the business would probably have had less training in establishing needs from the fact find but here are a couple of examples that you could adopt.

  Guardians for children

Where the couple has children a good secondary question is 'who would act as guardians to your children if you were both to die?'. Many couples have never reflected on this before but it would be commonly dealt with if a will were to be written.

Once they have considered this question (and hopefully suggested a guardian) it is a natural continuation of the conversation to ask what funds the guardian would have available and what would be left for the children later in life.

The solution is a joint life policy for a capital sum or a regular income (Family Income Benefit), not expensive but absolute peace of mind. Write this as two single life policies and the sum assured can be separated and doubled for just a few pounds. Consider writing the policy in trust if the size of the estate on joint death would give rise to IHT implications.

  “Wife Assurance”

It is often the case that the male in the relationship will have death in service benefits from their employer but their wife may have no cover outside of the mortgage benefit. Traditionally, it has often been the case that the couple believe that, in the event of the wife's death, the salary will continue, the mortgage would be paid off and the survivor would therefore be financially secure.

What they don't factor into account is the cost of childcare and the need to change a working pattern to ensure that the children don't suffer; a brief conversation will often result in acceptance of the need. In this respect you sell 'wife assurance' rather than life assurance.

Life assurance on a female life is very cheap and you can provide a substantial sum assured for a relatively small cost.

In both instances you are doing what is right for the family and your own income per sale will rise considerably. If this works for you why not review every similar opportunity from your existing client banks?

One of the frustrations about trading as a Directly Authorised broker is that, as soon as the 1st of April has passed (we can't ignore the irony in the date) you are liable for the regulatory fees for the following year, irrespective of whether your plans change during that time. This is compounded by the fact that the FSA does not even announce the final fee tables until after the date has passed.

The basic fee has risen to around £1,200.00 depending on the nature of the firm.

In the current climate this is not particularly helpful for a broker that decides that they would prefer to become an adviser of another business or make a move to a mortgage network for more support.

  Reclaim your fees for 2008/2009

This is not a generous offer from the regulator! We have released a limited promotion to rebate the fees of a directly regulated firm that takes the decision to join our network.

It recognises that the market is changing considerably, literally month by month, and that there are many Directly Authorised brokers frustrated by falling income and rising regulatory costs that could benefit from a move to Appointed Representative status.

Click here to find out more information on how to claim your fees rebate.

Home Information Packs have been around for over 6 months now and all new instructions at an estate agent now require one to have been ordered prior to marketing the property. The government have extended the temporary exemption that allows an estate agent to market the property before delivery of the HIP to December 2008.

HIPs were widely regarded at best as an irritant in the house buying process and at worst as a constituent factor of a decline of instructions as speculative vendors refuse to pay in advance to order one.

Considering the volume of anti-HIP sentiment, it is surprising that Connells, one of the countries largest estate agents, has just released research that shows that properties sold with a HIP are exchanging on average 12 days earlier than those without one.

As a mortgage broker HIPs can be a useful tool to create new mortgage prospects, especially if you have access to a 'no sale, no fee' product that removes all potential fears that a client may be left out of pocket. HomeLoan Partnership have provided access to no sale, no fee HIPs for member firms.

One final comment when considering the estate agency market at the moment. Independent estate agents can be particularly affected by a reduction in housing transactions. As usual this has a positive and negative implication. If you have an estate agent introducer you need to ensure that you are not over-exposed if they close the agency, diversification of your business is key.

Conversely, many estate agents that have turned their back on financial services in the past (or not put any effort into it) may now be a lot more keen to develop secondary income from mortgage referrals - you should re-approach your high street agents!

There have been many reports about the rising amount of people in mortgage arrears and it seems likely that repossessions will rise despite the government urging lenders to be sympathetic to the plight of over stretched homeowners.

Poor credit also reduces the amount of people that you can place at a decent rate, even if the loan to value stacks up.

Aligning yourself with a professional debt management facility can provide a method of helping your clients and prospects to repair their mortgage history and keep other creditors at bay.

This can also keep your life premiums on the books (as these are allowable expenses in debt management) and create a remortgage opportunity for a full & final settlement. You can also earn decent referral fees during the process.

HomeLoan Partnership have provided all of their firms with free of charge sophisticated debt management software and a referral facility to improve their business prospects.