Championing second charge mortgage lending

"Unfortunately, you still have that sort of perception that the second charge mortgage market is a product of last resort, and that they're very, very expensive," Maeve Ward, commercial operations director for Central/Mercantile Trust said.

Championing second charge mortgage lending

Maeve Ward, commercial operations director for Central/Mercantile Trust, is keen to let you know she is passionate about her job, particularly when it comes to championing second charge mortgage lending.

“Unfortunately, you still have that sort of perception that the second charge mortgage market is a product of last resort, and that they’re very, very expensive,” she said.

“(But) they are both regulated contracts. They both follow the same process. It is an advised sale, and rates have never been as low as they are now in the second charge mortgage market. It comes down to one simple thing: what is the right customer outcome?”

Her comprehensive response suggested she had been required to sing the product’s virtues on more than one occasion.

“I love educating and adding value wherever I can. I’m very passionate about the second charge mortgage market and it’s nice to have conversations with people that are switched off to it and then perhaps see them switch on to it.”

One of Ward’s chief roles is finding ways to help lend to underserved borrowers, including those with adverse credit and those who are self-employed. A difficult job at the best of times.

Given the often-complex credit history of these borrowers, she was asked whether there was a shortage of mortgage products that catered for their needs. “I think there’s quite a vast range of products out there. I guess where they become underserved is the requirements of the mainstream lenders,” she said.

Unluckily for them, most lenders have a rigid ‘black box’ underwriting approach as they look for “cleaner” borrowers with strong point scores and up to a three-year trading history behind them.

“There’s probably fewer lenders that lend themselves to those sort of complex income streams. So while they might tick most of the boxes, they then fall short because of the complexity of their income,” she added. For these underserved clients, seeking the advice of someone who works in the specialist mortgage market becomes even more crucial.

Data from The Money Charity showed that people in the UK owed more than £1.7 billion at the end of December 2021 – up by £64.2 billion compared with the same period a year earlier.

And according to recent data from the UK Government, 15.3% of workers in the UK were self-employed in 2019, pre-pandemic. ONS data placed the number at 4.53 million in 2020.

In the wake of the COVID pandemic and amid the uncertainty in the economy, it’s safe to say that mortgage professionals like her will be kept busy.

“Generally, there is a history, and it’s about finding the lenders that are willing to understand why (that person’s) credit score might have been impacted by something that has happened during their lifetime,” she said.

This could include high net-worth individuals who only have low point scores because they simply don’t have much active credit. Faced with complex income streams, automation can only do so much, meaning that the human touch is still essential, she said.

“We have led the way as a market on technology, but we do still have an element of human underwriting, which means that these particular borrowers can be looked at more holistically,” she noted.

As borrowers begin to feel the pinch with rising energy costs and tax increases – and even before the impact of sanctions on Russia are factored in – she was asked how that would affect her customer base, admitting that “some borrowers will be impacted harder than others”.

She said: “When we talk about energy prices and everything increasing that’s across the board, it doesn’t matter which market you’re in from a lending perspective. Obviously, the costs are the costs and therefore you need to

factor that into your affordability assessment. It’s very much an even playing field when it comes to assessing affordability.

“Naturally, at the end of the financial year, people are expecting a sort of cost of living pay rise, so you would like to think that the increase would be offset by an increase in the borrower’s salary to sort of to reflect it generally. But it would be fair to say that there will be some borrowers that will be impacted harder than others and they will be really limited in terms of where they can get any additional borrowing from.”

Underserved borrowers are not her only client base, though, as Ward sits across two companies within the Norfolk Capital Group. Her other role for sister company Mercantile Trust involves first and second charge bridging, first and second charge buy-to-let and – to a far lesser degree – first and second charge term lending on commercial.

With so many plates to spin, she was asked what had kindled her interest in finance in the first place. “I literally fell into it. I left school with A-levels, but I didn’t want to go to university as I was done with studying. I fell into finance and remember someone saying to me I’d be really good as a BDM.”

She initially laughed off the suggestion but quickly warmed to the idea, realising that selling “is all about building relationships and delivering on your promises”.

Mentored by the late David Johnson while at Shawbrook Bank – “he pretty much taught me everything that I now know” – she quickly moved up the career ladder, experiencing the world of start-ups, bridging lending and second charge lending along the way.

She learned important lessons after a bridging lending firm she set up it lost its funding line during COVID. “All of a sudden I was running a business and having to wear a multitude of different hats,” she recalled.

Now, she is on a mission. “I’ve got quite an aggressive four-year plan and I’m glad to be part of it from the start. I learnt from David to always deliver on what you said that you’re going to do. Be a genuine person in support and educate wherever you can, leave a lasting impression and add value.”