There is a belief in the second charge mortgage sector that underwriting is subjective. I can say that from experience, whilst requests for information differ from application to application, this is usually a reflection of the complexity of many individual financial circumstances. The challenge second charge lenders face is to work with the broker and customer to find a way forward, rather than create additional barriers.
Ultimately, specialist lenders want to lend! Our commitment to lend responsibly runs through our relationships with our broker partners to the way we review your customer’s application. Proof of this can be found in Pepper Money’s underwriting standards of service and application success rate.
Our underwriting is something we’re often praised for by the broker partners we work with – we respond with the equal amount of attention to detail as brokers provide when packaging their applications. I thought it would be useful to take a closer look at our processes to show you how we differ from other providers, and draw back the curtains as to how our underwriters assess customer applications.
Specialist lenders aren’t like the high street
Traditional high street lenders tend to rely on automated decisioning with binary outputs. This is overlaid with product offerings that are tailored to a single demographic, meaning some customers that represent a good credit risk are declined. Specialist lenders have product offerings that have been designed to cover a greater number of customer types and individual financial histories, taking into account their varied circumstances, from their credit history to their income.
As a second charge mortgage provider, it is essential that we understand these varied circumstances in our process. To ensure this is the case, Pepper Money leverages the best of both when it comes to underwriting.
We use digital tools that allow us to offer customers the most appropriate rate for their circumstances, utilising our proprietary software to highlight areas of concern. We then have a team of experienced underwriters who are empowered to make decisions where discretion can be shown within a compliant framework. These underwriters are comprehensively trained regardless of previous experience.
We accept that we live in an imperfect world where not everything is black and white and underwriters are encouraged to make decisions and write rationales that they feel are appropriate. When they make decisions that brokers may disagree with, our underwriters are supported by our sales team who will provide feedback and training where appropriate.
Building lasting relationships boosts broker trust
We are also happy to communicate with brokers about each of our decisions. Cases can be complex and we appreciate that we don’t get everything right. At times we misinterpret information. But in those instances, we are happy to be challenged and will work with brokers to find resolutions. We are not the only lender to do this, but I think that transparency of thought is important to brokers.
Transparency and flexibility are fundamental parts of our underwriting process and two things that set us apart from other lenders. We have a clear vision that centres around service. To us, this means making clear decisions quickly and communicating them in a way that is easy for the broker to understand. If there is more than one option to satisfy the requirement to progress the case we try, where possible, to present the options to the broker.
It is all about working together to deliver the best outcomes for customers.
Helping underwriters assess customer applications
A big part of Pepper Money helping brokers secure second charge mortgages for their customers and ensuring we are able to maintain a speedy process is case packaging.
Once packaged take a step back and ask yourself:
- Does this application make sense?
- Does the declared expenditure seem correct and where not, has this been challenged and rationale provided?
- Have you checked the lender’s approach to affordability and what can and cannot be used?
- Have you asked if there are any other income streams?
The more the broker questions and understands their customer, the clearer the application is for our underwriters and the more likely it is to complete.
We at Pepper Money champion people with a story to tell. Your applications help tell these stories. Our underwriters help your customer take the next step towards a happy ending.
If you’d like to understand more about our underwriting and how we can help your customer’s application, please contact Craig Collins on LinkedIn.