Therefore all companies that offer secured loans have to charge broker fees to cover these costs and make a profit. These fees are added to the loan advance and this can be an area where both you and your client can be well and truly ripped off.
We often see new secured loan brokers coming to the market with very little experience and no original ideas of how to market their products. They are usually ex-employees of established companies and see streets paved with secured loan gold, so what is the first thing they do? 'Let's pay 75% of our income to the introducer when the secured loan completes.'
It sounds great, but you have to ask yourself
- how long will they be in business for - could you pay away 75% of your income and still run a business?
- will they go bust before I receive my next commission?
- are they lying to me about the income amount they receive and their processing costs?
- to make any kind of profit they will have to charge the maximum broker fee possible on every application. Clients being charged up to £10,000 or more will not be happy clients in the future.
In our experience once they have been trading a few months and realise that (a) is not sustainable, it's usually (c) followed soon after by (b)! Introducers will begin to leave them when they find out it's (d).
How some secured loan brokers rip off you and your client
With interest rates at an all time low and second charge secured loans being such a great alternative to a remortgage, we wanted to know why so many I.F.A.'s and Mortgage Brokers are still reluctant to offer secured loans as part of their product offering? From our market research, the vast majority said these are the main two reasons: -
- Secured Loan packagers are not totally up front as to what the commission split is. Saying they will pay a 50/50 split of the net income sounds good, but they never reveal the processing costs or what their income truly is. The commission split payable is often not given until just before loan completion - by that time it's too late to shop around.
- Some packagers offering product sourcing software are often charging extortionate completion fees and paying the introducer an unfairly low percentage of the income received. One large packager was charging completion fees of £7,495 and paying the introducer just over £2,000.
We have heard of secured loan brokers inflating the amount of processing costs just to squeeze a bit more income from their introducer. And we know of one broker (thankfully now retired from the industry) who allegedly went to the lengths of falsifying lender commission statements with a lower income, and would present these to his introducers when paying his '65/35' commission split.
With Specialist Homeowner Finance you will earn fantastic commission
without the rip-offs. Call the Secured Loan Specialists today