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Assisting a borrower in their hour of need can turn a regular client into one of your most loyal. However, according to Otto Dargan, top broker at Home Loan Experts – and two-time winner of The Adviser’s BrokerIQ – catering to these borrowers brings greater reward than just profit
Why do you prefer to work with borrowers in difficult situations?
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Firstly, from a business point of view, there is less competition. This is because many brokers believe that non-conforming loans are not NCCP-compliant – which is complete nonsense. Secondly, these are the borrowers who really need a good broker; we have the opportunity to make a big impact on their lives. That’s more interesting, and much more rewarding than just getting people a low rate with a major lender.
How do you overcome the challenge of writing a specialist rather than a prime loan for a client?
A specialist loan needs to be positioned as a stepping stone to getting back on track to a prime loan. The first thing I do is talk to them about the solution and how I am going to get them back to a prime loan. Ultimately, if you believe in the solution that you offer, then they will too. If you don’t believe in it, then of course your clients won’t either. Specialist lender business development managers were very helpful and taught us how to position their loans, so for people looking to get into the market that’s a great place to start.
Typically, what is the first point of contact with a specialist borrower?
Normally it is in a crisis. Often, they contact you very late in the crisis so they need something done right away. Typically, they contact us because their debts are spiralling out of control and they can’t see a way out, yet they don’t want to sell their home.
What is the most effective channel for reaching specialist borrowers - networking, advertising or client referrals?
Referral is by far the best return on investment. A simple email to your past clients asking if they have any friends who own a home but are not doing so well financially is enough to get plenty of business. In addition to that, self-employed people often need specialist loans because they have defaults, can’t provide financials or need money for business purposes. So if you work in a referral partnership with accountants you’ll do pretty well.
For this type of borrower, what are the key benefits of using a broker?
They need a broker much more than a prime borrower does. For them, the broker channel may be the only way they can get a loan. Most clients haven’t even heard of specialist lenders, they don’t know the differences, and they don’t know how and when they can get back to a prime loan.
How do you go about generating referrals from specialist brokers?
Once you’ve done a great job helping a few clients, then you’ll get more referrals from them. Just ask them if any of their friends are on a tight budget at the moment and you can get a few prime refinances or you may find that they are in a similar situation. Ultimately, them. Just ask them if any of their friends are on a tight budget at the moment and you can get a few prime refinances or you may find that they are in a similar situation. Ultimately, specialist borrowers are far more loyal and provide far more referrals because they needed you and you helped them. It’s a different relationship to that with a prime borrower.
