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First-time seller

Any broker entering the mortgage market with the aim of becoming “the best place in Britain to buy a mortgage” is not lacking confidence but reticence has never been associated with Hargreaves Lansdown.

The IFA, a high-profile and sometimes controversial name in the areas of investment and pensions, is in the process of recruiting advisers for its new broker division, Hargreaves Lansdown Mort- gages, and intends to have 25 people on board within six months.

It is talking to senior people currently with existing players in the market. Although it says it is too early to name any names, it says it is trying to attract people from the country&#39s top three mortgage brokers.

It says it first started planning this launch around six months ago. During October, the IFA mailed its 400,000 clients to ask what they want from a new mortgage service.

Pulling together the division is HL&#39s managing director pensions Adam Norris, who will then hand over to Ian Jordan. Jordan will move from the firm&#39s general IFA side to take over the day-to-day running of mortgages.

Norris says: “We are the biggest distributor of Isas in Britain and the biggest distributor of stakeholder and annuities. We would like to be succ- essful and become the biggest in mortgages.

“We have gone in to see how it feels and what competitive products we can come up with. We want to be known as the best place to buy your mortgage from.”

Its decision to target the mortgage market roughly coincides with another IFA known for being a player in the more traditional areas of investment and pension, Towry Law, setting up a specialist mortgage division.

Towry Law Mortgage Service launched in the middle of this month but Norris denies the timing is anything more than pure chance. “This is no more than coincidence. We have done it for different reasons and have different clients.”

He denies that the current volatile state of the investment markets is a motive behind the decision to diversify, saying it is the success of HL&#39s existing business which makes this an opportune time to expand.

Norris says: “It is a comfortable time for us. Three months ago, we launched a new Sipp, this month we are launching term insurance and mortgages.”

In raising the public profile of the new service and generating business, Norris says Hargreaves benefits from low marketing costs because it can inform its whole client base of the move by including a flyer in the company&#39s existing magazine.

Norris says within one week of the mailshot going to 400,000 people, around 400 responded, asking for more details from HL&#39s call centre – which will send out information within 24 hours and track all enquiries.

As well as finding out what clients want, HL has been out on the road meeting major lenders, including Woolwich, Nationwide, Standard Life Bank, Intelligent Finance and Legal & General Bank to negotiate product deals.

Hargreaves believes its predominantly high-net-worth, low-risk client base looking for low loan-to-value and with a lot of equity in their existing properties will encourage lenders to offer the most competitive deals in the market.

Norris says: “We have a different client profile to the likes of Charcol. Over half of our client bank are people with a lot of equity in their house and would only be looking for about 40 per cent loan-to-value. Their average house price is £400,000 while their average mortgage is £80,000 and their average salary is £50,000. They are not first-time buyers.”

Hargreaves realises that if it wants to be known as one of the biggest and best in mortgages it cannot scrimp on investing. It says as an independent firm it has freedom in deciding budgets.

Norris says: “We are very serious about this and are not messing around. We have invested £100,000 in the first month and will have invested a quarter of a million by Christmas.”

He says there is no limit on how much money can be spent and the IFA would be happy to keep investing for four years before a profit is made.

Hargreaves Lansdown certainly has ambitious plans and its track record in other areas of financial services would seem to give it the credentials it needs to succeed in mortgages. But a lot of this will rest on what experts it can recruit if it is seriously to challenge the likes of Charcol.

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