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The Adviser talks to My Mortgage Freedom's Anthony Alabakov to discuss how he finds working with specialist lenders and what the advantages are
Q: Have you always used specialist lenders?
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No. When I first started, it was really just understanding the industry and learning the ropes. My clients were usually first home buyers and investors. But over the last 18 to 24 months, the business has evolved.
Q: What turned you on to specialist lenders?
When I started as a broker, I didn’t have any idea of what specialist lending was. But being a broker is all about providing a solution to your clients.
It is not always about the interest rate. Right now, a client can pay around five per cent or even better, but if you are offering them a solution at 6.5 per cent, you have to ask what the cost is between the two rates.Most of the time, clients will understand that. Once I understood specialist lending as a solution, it just evolved from there.
Q: How did you get involved with Pepper?
I had a self-employed client with a situation that the mainstream lenders couldn’t deal with. I asked my aggregator what I should do, and they suggested some of the non-bank lenders and alternative lenders.
From there, my relationship with Pepper has developed. It’s about me understanding them and them understanding me and my clients. It's evolved over the last two years.
Q: What feedback have you received from clients?
Traditionally, self-employed clients have had a relationship with their bank for 10 to 15 years.
They just weren’t aware that there are alternatives out there. It might not be a long-term solution – it could be a 12- to-18-month solution – but it just fits their needs right now.
For the sake of an extra $5,000 to $15,000 in interest over that period, it is not a dealbreaker for them. It is more an understanding that they have a solution to fit their needs and restructure things in the future. For us, it provides a stickier client in the long term.
Q: What have been the key benefits of using specialist lenders?
It’s about making sure we can do more deals. In the past, I would have shied away, let that client go and said I couldn’t assist. But now, we like to think if there is a solution to be provided, we can provide it using our options with lenders.
It’s not just the mainstream lenders. There is a whole range of options that these specialist lenders - and Pepper in particular - can provide to most clients.
Q: What advice would you give to brokers who currently don’t use specialist lenders?
Just get out there and speak to lenders. Pepper has got some really good initiatives. I’ve become really close with them. It is just about having another feather in your cap for clients. It’s about building a good business by providing a solution to your clients.
I’d tell brokers to talk to as many lenders as possible; meet with at least one a week. When a client throws a curveball and doesn’t have this or that, knowing you can offer a solution then and there is priceless.
Q: Can any client require specialist solutions?
We’ve got plenty of clients who have changed circumstances from when we originally did their loan a few years ago. When we verified their income and did the reasonability test, we had an alternative solution for them. In time, they may go back to a mainstream lender.
We have targeted self-employed clients, where it’s been hard to verify income in the traditional manner.
