Legal & General Mortgage Club and Vida Homeloans - A Specialist Partnership

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As a highly visible new entrant to the specialist mortgage sector in the last year, Vida has come to market with an innovative approach to proposition design – consisting of a combination of products, criteria and service -  exclusively delivered through mortgage intermediaries. Well before launch, Vida researched the underserved customer segments that exist within the UK mortgage market, then constructed bespoke criteria-driven solutions for each segment and delivered those solutions through specialist mortgage intermediaries.

Key to the overall proposition’s success – which has already resulted in more than £1.6 billion in DIPs and £800 million in applications -  has been Vida’s partnership with L&G Mortgage Club, one of the largest and longest running clubs of its type in the UK. After just 9 months of full trading, Vida has won L&G Mortgage Club’s 2017 Award for ‘Best Lender for Partnership with Mortgage Club’. The joint activity, engagement and marketing that the two organisations have been undertaking in 2017 is a blueprint for other lenders and distributors looking to maximise the value of their relationships.

Partnership Launch

Vida Homeloans launched on 5th October 2016 with a 3 month pilot, working with selected distributors such as L&G Key Partners to refine the proposition, followed by a roll out to wider distribution, including the whole L&G Mortgage Club, in January 2017. Vida’s senior management team - which includes Chief Executive Officer, David Tweedy, Sales & Marketing Director, Guy Batchelor and Director of Sales – Mortgages, Louisa Sedgwick - knew that they needed to launch an innovative proposition to the specialist market sector in order to stand out from the growing competition and to underpin the company’s plan to grow to become a multi-billion pound mortgage lender within 5 years.

“We chose L&G Mortgage Club for our pilot and roll out phases because of their experience, knowledge and broad distribution” comments Louisa Sedgwick. “So we knew that, if we could get the product and service proposition right for them, we had a good chance with other distribution channels, once we knew the pilot was a success.”

Before launching, Vida embarked on an extensive programme of research amongst consumers and intermediaries, including L&G Mortgage Club members, to identify and quantify the customer segments currently underserved by the UK mortgage market. The consumer research was conducted via small group discussions in state of the art viewing studios and using online omnibus questionnaires, adding quantitative data to the initial qualitative research. Having conducted rigorous competitor analysis to define its position in the market, Vida then developed the outline proposition in terms of target segments and online service experience.

Product Proposition

The proposition caters for the self-employed, contractors, those with complex income from a number of different sources, first-time buyers and those who can only afford to buy with up to 3 friends or family members to be able to get onto the housing ladder. Vida will also lend to portfolio landlords, expats living overseas within the EEA who want to purchase a buy-to-let property in the UK. It will also consider lending to customers with impaired and improving credit. Whatever the reason, many mainstream lenders do not have the capability or appetite to deal with this kind of business and this has resulted in a number of underserved market segments.

Feedback from intermediaries about Vida’s presentation of its key product areas in its marketing material has been extremely positive, both via personal feedback to Vida staff and through Vida’s continuous online survey of broker satisfaction. As Jeremy Duncombe, Director, L&G Mortgage Club puts it “Vida has delivered an innovative proposition since coming to the market just a year ago.  Its product range covers the key niches of the specialist mortgage sector in a simple and effective way, utilising a technology platform which delivers online DIPs and enables full mortgage applications in minutes. Based on our experience so far, Vida won our ‘Best Lender for Partnership with Mortgage Club’ award earlier this year.”    

Partnership Marketing Programme

Fundamental to the success of the two organisations’ relationship have been the partnership marketing activities overseen by Ian Giles, Director of Marketing at Vida Homeloans and Danny Belton, Head of Lender Relationships at L&G Mortgage Club. As well as Vida’s proposition-related news being carried in both the L&G Digest e-newsletters and solus e-mailshots to members, the following programme has been developed to communicate Vida’s many ‘USPs’ to L&G Mortgage Club members:

Society of Mortgage Professionals events across the UK in March 2017, where Louisa Sedgwick sat on panel debates which focused on the Buy to Let market and its challenges and opportunities for intermediaries

  • L&G Mortgage Club Live events in May 2017, where Mike Cook, Director of Products and Customer Proposition at Vida, presented facts and figures on the Buy to Let market
  • An L&G Mortgage Club event on fraud, risk and compliance in September 2017, addressed by Jeremy Russ, Vida’s Chief Risk Officer
  • Specialist Lending Events in various locations during September, October and November, with presentations on the Specialist and Seconds markets by Louisa Sedgwick and Vida colleagues Simon Burnell, Director of Sales – Second Mortgages, and Karen Rodrigues, Strategic Partnership Manager.
  • A pilot Specialist Mortgage Q&A session in October – featuring Louisa Sedgwick and David Whitford, Intermediary Support Team Manager - giving L&G Mortgage Club members the opportunity to call into Mortgage Support Services in Barnsley and to speak to a Vida expert
  • Hosted round tables. Vida has contributed to a number of these events, covered by the trade media, including New Build, Later Life Lending and the return of the Specialist Mortgage sector.
  • 2 Webcasts for L&G Mortgage Club TV – Louisa Sedgwick has appeared as part of a panel and a solo webcast, both focusing on specialist lending.

Technology Innovation

One of the biggest problems for established lenders is legacy systems but Vida does not have that issue. Vida chose BancTec as its technology provider and bought an off the shelf package. It then worked with the software house to enhance the systems, improve their capabilities and meet specific requirements that were particular to Vida.

The technology has been built with L&G Mortgage Club members in mind, adding in tools they will need, like maximum loan calculators for residential and buy to let business, which are very slick and easy to use, as is the online decision in principle and full mortgage application process. Online DIPs are available in 10 minutes and a further 15 minutes is required to complete a full mortgage application online.

The key point is that at DIP stage Vida is sifting out customers who don’t fit the published criteria. Then skilled underwriters with many years of experience take over. Each case is looked at individually on its merits, facts and data to find a reason to accept the case and achieve a good customer outcome whilst remaining a prudent lender, not to find a reason to decline the case. Brokers get the opportunity to present their customer’s story to a human being and thus prove their worth to the customer. Vida uses technology to automate the mortgage process but the underwriting is carried out by specialist lending experts, not by machines.

Future Plans

As Vida reaches the first anniversary of its distribution partnership with L&G Mortgage Club, it has signalled its intention to pursue continued growth into 2018, launching new products allowing debt consolidation up to 70% LTV on its Residential range and three missed unsecured credit payments in the last six months on its Residential and Buy to Let ranges, to attract more business from underserved customer segments in the UK mortgage market. It is also exploring the second charge mortgage market with the objective of launching a pilot with selected distributors very soon.

Market conditions are still positive for specialist lenders like Vida and there are likely to be more new entrants into the specialist sector in 2018, meaning that newly established players like Vida Homeloans will need to keep working closely with leading distributors like L&G Mortgage Club to stay ahead.

The final word belongs to Danny Belton, Head of Lender Relationships, Legal & General Mortgage Club, who comments ‘From a Distributor perspective, competition and choice is important across all market sectors, especially those that are developing and growing like the specialist lending sector. However, launching any new lender into a niche sector can be difficult, and it is through building a good working partnership that the right outcomes are achieved. Bringing the Vida Homeloans proposition to market has been a great example of this, and they are now firmly established in the specialist lending sector, providing the competition and choice that benefits intermediaries and ultimately customers.’