Mortgage Clubs – a new way forward for Specialist Finance

30 Sep 2021

How many of us have tapped into a mortgage club in order to get access to ‘exclusive’ products that are not available to the individual adviser sourcing in the normal way? This may be familiar to the reader or something they have only heard about in the residential mortgage market. But after nearly six months of trialling an addition to the SimplyBiz Mortgage Club with our Commercial partners from FIBA, we are preparing to expand our offering.

For the uninitiated they definitely fulfil a need because of the collective nature of their structures. The more advisers who using them increases their buying power and they become more valuable to lenders as a tangible business source. For independent brokers, clubs have been a vital resource because they allow the smallest adviser to access lenders and service providers, which they would normally have little chance of partnering on their own.

As we enter our old world again, there will be a growing need for lenders and advisers to find more efficient ways to interact. Small brokers make up the majority of the market for specialist finance and will need to be able to demonstrate their ‘whole of market’ credentials to clients and one of the only ways to do that is to show they have full access to that market. With lenders fighting to attract business in an uncertain but highly competitive sector, mortgage clubs are going to become an increasingly important resource in turbulent times.

If you combine the capability of a finance platform or sourcing tool, you can begin to see the advantages that technology can start to bring to the specialist finance sector. These resources are designed to help the intermediary, allow the broker greater choice on their customers behalf, whilst at the same time creating a time stamped trail of lenders that have been considered for the customer.

The Club that provides those specialist property finance deals, whether it is across Commercial Mortgages, Bridging Finance, Buy to Let or Development Finance can help enhance that firms offering to their clients, both existing and new. The unique knowledge of the specialist market is a pre-requisite when building a Specialist Property Finance Club along with the ability to bolt onto an existing very successful club structure, but the end user, i.e. the broker or adviser can then has the ability to select the right lender for the right client.

Many firms have taken the opportunity to diversify over the past 18 momentous months and having the ability to access a number of lenders specialising in this highly defined area is an important factor in adding an extra dimension to their business. An intermediary who can offer a variety of solutions for their client requirements will add another strength to their proposition.  Whilst some of the lenders who were part of the launch were familiar to how a Mortgage Club operates, there are others who are new to this type of interaction and therefore offer different and innovative solutions for client requirements.

If we can add in the combination of a specialist property finance sourcing tool to a specialist club environment with enhanced offerings to the customer, this can only be a benefit to all parties involved in a commercial transaction. With a number of technological advances that we have witnessed over recent years, this is just an example of how innovation is going to be a major part of the interaction between all groups involved in commercial finance over the upcoming years.

We have seen the wide range of new lenders come to the market since 2009 and how they have benefitted UK SME’s. There are a number of new SME banks, both already with licences granted and also those already with applications in with the PRA. Therefore, any help we can give to the customer in sourcing our broker and funder community, the greater help we can give to a recovering economy.