5 ways to be successful in 2023

There’s no doubt that 2023 is going to be a challenging year for business. It’s still unsure where BoE base rate will peak and when, by how much the housing market will slow, by how much house prices will fall, by how much inflation will decrease and how long the cost of living crisis will continue for.

While there’s not a lot of optimism to be had, it’s not all doom and gloom and current market conditions offer you a number of opportunities to boost your business this year.

Here’s our top 5 ways to be successful in 2023.

1. Make sure that you are on top of remortgage opportunities.

ONS data reveals that there are 1.4m households coming off fixed term deals this year. The majority of fixed rate mortgages in the UK (57%) coming up for renewal in 2023 were fixed at interest rates below 2%. The ONS data shows that in the first quarter of this year, 353,000 fixed rate mortgages will have to be renewed. Its calculations, based on Bank of England transactions data, suggest that the number of fixed rate mortgage deals coming to an end in 2023 will peak in Q2 2023 at 371,000.

With lenders long processing times, make sure that you are speaking to your clients about their next mortgage move now. Diarise and diarise again.

2. Support your clients in debt by exploring second charges.

The New Year will always find clients in debt.

Personal debt always rises in January and even more so this year, given our economic challenges. UK unsecured borrowing is at its highest level since 2004 and the latest BoE credit card data shows that an additional £1.2bn was borrowed in November alone – before Christmas.

The New Year is also the deadline for tax returns and clients may find themselves shouldering an unexpected bill. If you have clients in either of these situations, then do talk to them about a second charge.

There are many benefits to a second charge versus using an unsecured credit line.

Interest rates are significantly lower than credit cards. At around 7% versus c.22%. Plus, the debt is structured with a second charge – allowing your clients to budget with confidence.
Second charges can be used on a range of properties. If your client has a buy to let portfolio, or even a single rental, then a second charge can be taken out on that property – without impacting the mortgage on the home they live in.

A second charge doesn’t disturb any lower rate mortgages that are currently in place as they simply run alongside them.

Plus, second charges can be arranged in a much shorter timescale. At Crystal, we complete second charges around 25% faster than we do even for bridging finance!

3. Take a fresh look at bridging. It’s a versatile, quick and surprisingly cost effective solution.

If you haven’t looked at bridging finance as a way to support your clients, then you should. It has many advantages that overcome the challenges that your clients are undoubtably going to face this year. Such as –

• Rates from 0.47% p.m. with a product fee of 2% (Correct as 11 January 2023.)
• No stress tests/ICRs to pass
• No exit fees/ERCs
• Personal/rental income generally not required
• Up to 100% LTV available with additional security
• Terms available up to 24 months.
• Fast completions in days rather than months.

4. There are acquisition opportunities for BTL clients in a slower housing market.

The slowdown in the housing market and the squeeze on incomes will sadly force property owners to sell up and lead to an increase in repossessions. Many of these properties will be sold at auction and bridging finance is an ideal solution to both secure property at a reduced price and to fund property renovations. In times of stress on rental incomes, it makes sense for BTL portfolio clients to be diversifying into HMOs and MUFBs as a way to overcome challenging ICRs.

5. Support your SME clients through commercial finance to raise working capital.

Commercial finance is not just there to help business owners buy their premises. Though at a time of increasing rents, it is certainly something you should be talking to your SME clients about.

Commercial finance can be used in any number of ways to support SMEs where the property is used as a security against the loan – including asset and invoicing finance.

Recent research from Growth Lending revealed that almost a quarter (23%) of the SMEs they surveyed are seeking funding to raise additional working capital. And, with more than two thirds (67%) of SMEs having at least £50,000 tied up in late payments, it is possible that many are raising additional funds to create a cash buffer to offset the impact of overdue invoices. The research also revealed that businesses are also struggling with overheads with 19% of those seeking funding doing so to cover expenses such as rising energy bills and the higher cost of goods.

So, while this year will be challenging one for mortgage brokers, it could also be a successful one for those who are willing to face into the opportunities it presents and diversify.

At Crystal, we surveyed our broker database in December and 70% of them told us that they plan to diversify in 2023 and explore new market opportunities. Don’t be one of the 30%.