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Breaking into specialist lending has presented this Mornington Peninsula broker with significant opportunities to expand his business, as he came to realise that there are many people in need of non-conforming loans.
How long have you been offering specialist lending? Why did you start offering specialist lending, what got you onto it?
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I have been offering specialist lending as part of my business for the past 10 years. I first got into specialist lending after being approached by friends seeking assistance with their finances that needed a lender who understood their circumstances. What I realised was that there were a lot of people looking for these services, and there were a lot of opportunities to expand my business.
Is there a particular sector that you mainly serve, e.g.: aged care finance, medical finance?
I see a lot of self-employed applicants, that are looking for car finance, or looking to purchase property. I’ve also helped a lot of customers recently that have had previous credit issues. It’s good to know that even when these customers approach me, I have access to products that can help them achieve their financial goals.
What’s involved with specialist lending? How does it differ from standard residential lending?
With standard lending, you may have 10 to 20 options for a client across a panel of lenders, but this isn’t the case with specialist lending. So, to get the desired result, you’ve got to know your customer’s situation really well, and then you need to understand which lenders are more flexible and likely to have an appetite for that client’s circumstances.
Sometimes, a lender will want to see that a customer’s situation has improved before they take on any loan. In these situations, you may need to help create a plan for the customer to get them back on track. Encouraging the customer to be patient and focused is important, as it could take six months or more before they are properly positioned to borrow.
How has adding specialist lending to your portfolio/loan book benefited your business?
Being able to offer products to a wider range of people has really helped me grow my customer base, and with it, the number of referrals I receive. Typically, those clients who need a specialised lending solution are incredibly grateful when you help them work through a tricky situation.
As well as singing your praises to friends and family, they are the first to return for additional loans to support their business, vehicle purchases or SMSF property investments. The additional revenue stream from all this activity helps keep business ticking over when other parts of the market slow down.
Why do you offer specialist lending? When did you start, how did it come about?
There’s a really simple reason why I like to offer specialist products – because I don’t like to say ‘sorry I can’t help you’. As an LNS adviser my role is to help customers that are looking for finance, not to turn them away because I can’t help.
I also want to stand out from the thousands of brokers that don’t offer specialist lending – it’s been a real differentiator for my business.
How difficult is it for a residential broker to master specialist lending? What sort of support do you receive?
I think there is a common misconception in the industry that it’s a difficult transition, but that’s not necessarily true. You obviously need to explore the different lenders and ask a lot of questions to understand their policies, but if you get the right support it can be relatively seamless.
I am a Liberty adviser with Liberty Network Services, so I’ve been lucky to receive a great deal of support. LNS provides lots of information on different lending scenarios, as well as marketing and compliance support. I’ve also been able to access its Spark technology platform so I can stay mobile, fully informed and focused on creating new business.
What percentage of your total loan book is specialist lending?
At the moment about 30 per cent of the loans I’m writing are in the specialist custom space, but this can fluctuate higher and lower depending on what is happening in the market.
Do you see more brokers moving into specialist lending in the future?
I think that while there is this false perception that specialist lending is too hard and it takes a lot of time, brokers will stay away. But the market has changed a lot in the last 12 months, and a number of residential brokers are looking for new ways to grow their business, so we might see a change.
