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Specialist borrowers, according to Nino Eid, are everywhere – you just need to know how to find them
Fox Symes Financial's manager of mortgages, Nino Eid, says there are two ways in which brokers can tap into the specialist lending market.
One is to specifically target them through advertising and marketing – TV, radio or online. The other, he says, is to start saying ‘yes’ more often.
Brokers should look at the clients who are making enquiries, or walking through the door, who can’t be serviced in the same way as a ‘standard’ borrower.
According to Mr Eid, more borrowers fit into this category than might be imagined.
“Ideal candidates for specialist loans include clients who do not fall within the traditional lending criteria,” he says. “Clients with bad credit ratings, clients with arrears past or present, and clients with income streams which would not be suitable for traditional lending.
“The typical profile of a specialist borrower is a person who has fallen behind on their mortgage repayments, and fallen behind on their secured and unsecured debts. This borrower may have blemishes on their credit files or could possibly even be discharged bankrupt.
“The typical client may also have not been in their current employment for a period acceptable to traditional lenders.”
These clients, he says, are already right in front of you.
Fox Symes Financial started catering to these borrowers precisely for this reason.
“We decided to cater to this market due to the increased enquiry level from clients who did not meet traditional lending guidelines, but did meet those of specialty lenders,” he says.
With would-be borrowers – potential clients – already asking for help, as a broker you just need to find a product that meets their requirements and objectives.
“The wariness of some brokers to write specialist loans seems to stem from a lack of confidence and knowledge of the products on offer,” Mr Eid says.
“Brokers need further education and exposure to the benefits of these types of offerings,” he says. “Speciality lending requires a particular type of sales strategy.
“Brokers need to be selling the solution, benefit and then finally the rate, fees and charges.”
It is obvious why brokers are well placed to help these borrowers, he adds.
“Brokers are suited to catering to speciality borrowers because they have a panel of lenders where they are able to find the most suitable loan to meet the client’s requirements and objectives.”
Giving it a crack
Specialist lending has long been a part of the Fox Symes business model. Working with Pepper, however, had some unexpected rewards for Mr Eid mid-last year. In June 2012, the non-bank lender ran a competition which encouraged brokers to “Give Pepper a Crack”. The competition gave all brokers who settled a loan with the lender before 30 June the opportunity to win an iPad or iPhone 4S.
Mr Eid was the lucky winner and opted for the iPad.
Pepper was “overwhelmingly pleased” with the success of the contest, a spokesperson says.
“We are grateful to all our brokers who have given Pepper a crack and congratulate Nino on his prize.”
Mr Eid would still be doing the right thing by his clients even if iPads weren’t involved, but the win was a welcome surprise for the mortgage manager.
Getting it right
According to Mr Eid, the most important steps in getting started in this market segment already form a key part of a broker’s job description: education and relationships.
“The best approach is for brokers to become familiar with the different products available and to form strong relationships with their BDMs, who can offer advice on particular scenarios,” he says.
“Further to this, brokers must spend time understanding the client’s unique situation and requirements to match them to a suitable loan.”
Catering to these clients can also help a broker diversify their business, adds Mr Eid.
“Specialist borrowers may also benefit from insurance products, financial planning advice and assistance in setting household budgets,” he says.
For Fox Symes, the business opportunities that specialist borrowers provide are crucial to the company’s success.
“Fox Symes is the largest provider of debt solutions in Australia,” Mr Eid says. “Speciality loans are a critical component of our overall business.”
The year 2012 was a good one for the specialist market, and this looks set to continue into 2013.
“The current economic climate will see more and more clients fall outside the criteria for traditional lending, making them suitable for the specialist lending market,” Mr Eid says.
“For this reason, the strong growth experienced in 2012 should continue in 2013.”