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The current scrutiny on mortgagor expenses and affordability will “benefit the industry at the end of the day”, an award-winning broker has said.
Mortgage Choice Ormeau broker and winner of the Mortgage and Finance Broker of the Year category at last week’s Women in Finance Awards 2018, Deslie Taylor, stated that while the increased scrutiny on expenses and affordability was adding time and workload to a broker’s role, she believed that it would benefit the industry and customers in the long term.
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Noting the recent commentary around the use of Household Expenditure Measure (HEM) and arguments over whether it should be abandoned, Ms Taylor said that more in-depth conversations and note taking around a mortgagor’s ability to afford a loan had helped her business.
Speaking to The Adviser, the Queensland-based broker said: “This whole mortgage industry is an ever-changing beast, [but] changes in the lending world aren’t going to affect us because we are giving the clients the right choices and the right information up front.”
She elaborated: “Before the loan goes to the lender, I’m meeting with clients and really going through their cost of living and their expenditure, and I’m doing much more of an education piece with clients now in regards to being ready to refinance or to purchase a new home.
“I can go through their bank accounts and show them the areas in which the lenders are going to be concerned and we will put them on a savings plan or on a budget schedule that we want to see them adhere to for a period of three to six months.
“So, rather than having a client get in front of me and assume that we are going to write the loan immediately and submit it to the lender the same day, I really take the time to educate the client in regards to my concerns (if there are any that I think could mean they’d be knocked back) and I address them there and then and put them on a savings plan, accordingly.”
Ms Taylor added that once the borrower can show that they can adhere to the savings/budget plan, she will then submit the loan to the lender and finds that it then tends to get approved “without an issue”.
The Mortgage Choice franchise owner said that preparing a client for a change in lifestyle was important not only for the client, but also for the lender and the broking industry, too.
“I think it is for the benefit of the whole industry at the end of the day. But it’s not just important for us, it’s important for the client, too. Because what is going to happen when interest rates start going up and all of our clients have become so accustomed to living the lifestyle that they are currently living?
“The way I see it is that, by educating our clients to understand what they’re doing now in regards to their lifestyle and habits and showing them how it could affect their ability for them to live comfortably in the future (should interest rates start to rise again), we are preparing them for the future.
“The last thing I want to see is clients over-committing or being hit with higher interest rates and feeling like they can no longer afford their mortgage because they don’t realise they need to change their lifestyle.
“So, it is really about educating the clients in regards to the importance of putting extra money in the mortgage and making sure they have savings for a rainy day and incorporating into their budget a buffer so that, if rates do go up, they are going to be OK with that.”
According to Ms Taylor, this system not only provides the borrower with a more realistic picture of their lifestyle once they take on a mortgage, it also cements the broker as a trusted adviser.
She added that, coupled with more detailed file notes, this system has helped reduce touch points and improved turnaround times.
“I think 100 per cent that is has improved approvals,” Ms Taylor told The Adviser.
“My file notes were always thorough, but now, instead of giving a lender half a page of bullet-point notes in regards to what the client is wanting to do, I now spend a good 20 minutes to half an hour typing up my summary of the interview, what we spoke about, what the client is looking to achieve today, what they are hoping to achieve in the next 10 years, the reason they have chosen this product and why they feel that this product will benefit them.
“This means that when a lender actually gets my file, once they’ve read through the notes, they themselves feel as though they have sat in on the meeting with me and the client. So, although it has probably taken me an extra half an hour to prepare a file for submission, I am making sure that the conversation I have with the client is relayed back to the lender.”
Ms Taylor added: “If we are very, very transparent and have these open lines of communication, it is making it easier for the lender to actually physically approve that deal.”
Find out more about Deslie Taylor and the Women in Finance Awards in the November edition of The Adviser magazine.
[Related: The leading women in finance honoured]
