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Servicing the ‘non-conforming’ or ‘specialist’ market can be a great opportunity for a broker to stand out from the crowd and lay some strong foundations for their business
While any broker can write specialist loans, some have chosen to build their business around the specialist sector.
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Certainly, these loans may at times be a little more difficult and time consuming to write, but they can form the building blocks of a very successful broker business.
Giulio Avian, director at Fundsnational Innovative Mortgage Solutions, says he realised the potential of the specialised market sector as far back as 1999.
“I found an opportunity to differentiate myself from the normal broker and I have stayed in that sector ever since,” he says.
After many years of working in this space, Mr Avian says he and his team have such a good understanding of the market that they can base their entire business model on specialised lending.
The introduction of NCCP in 2011 also had specific implications for the specialist market, which Mr Avian says has been a good thing.
“If you can demonstrate that, within the Act, your client can afford the debt and will be in a better position for it, then you can communicate this with the specialised lender, which in most cases will accept your recommendation,” he says.
In fact, Mr Avian says he has great relationships and works closely with specialist lenders when servicing his clients to ensure both he and the lender are protected and that the client achieves the best outcome.
“We discuss ... why we are recommending a refinance,” he says.
“We double check and triple check everything so that in the event that something does go wrong, we have acted within the NCCP guidelines and that protects me and the proposed incoming lender as well.”
In for the long term
While Fundsnational targets specialist borrowers in a couple of different ways, including advertisements and on the company’s website, Mr Avian says a large proportion of business actually comes from referrals.
“[We work with] solicitors, accountants and other mortgage brokers who aren’t very comfortable or don’t have an understanding of the specialist market,” he explains.
Mr Avian adds that he has a commercial relationship with these partners and pays a referral fee. For some brokers, specialist loans can be too time consuming to write; for him, the investment is worth it, given the loyal and long-term relationships that result.
“It’s something where people struggle for whatever reason and these are the clients you’re dealing with,” he says. “The arrears and the defaults are by-products of something in life that hasn’t gone to plan.
“These clients will be extraordinarily loyal – it’s actually a lot more than that – this is something where you are changing people’s lives and it’s more than just a refinance.”
Mr Avian believes his role is to provide advice that will turn his clients’ situation around. Rather than writing just one specialist loan, he says, he builds a plan to create a solution, which often involves more work as the client’s financial situation gradually improves.
Clients who start out by securing a specialist loan may then move on to near-prime and finally to prime loans and rates – and to financial stability and security.
“Our first role, most importantly, is to create an advice program,” he says.
“It’s so important that the transaction is conducted with expertise and an understanding of what you need to do to create a solution in order for the individual or the family to get through this period.”
