Mortgage Broking Tips: Escalating A Loan

Your clients hold the key, not lenders

It’s probably not what you wanted to hear but it needs to be said anyway: escalations don’t work.

Escalating a loan is usually a waste of your time so instead you should be educating your clients before they start looking for a home and managing your client’s expectations.

Why don’t they work?

Some lenders find themselves with most loans being escalated and if every loan is urgent, none of them actually get ahead in the queue.

With some lenders, there are multiple types of escalations.

You’ve probably noticed that if a customer is about to lose their deposit how amazingly fast the lender can move!

However, most escalations are in effect an email or task for the file owner which they’ll get to when they get to it.

So stop harassing your BDM and instead find a better way to deal with the problem.

Happiness = Expectations - Reality

If your customer expects approval in a day and it takes a week then in their eyes you’re a terrible broker.

However, if you explain to them that their situation is complex, the lender is inundated with applications because of their sharp pricing and it’s the end of the financial year then they’ll lower their expectations.

When the approval comes through in only a week you’re a great broker!

Lenders may tell you they take 2 days to approve a loan but that isn’t what you should tell clients.

Lenders are often wrong!

On top of that, they may ask questions or have a missing info request.

So you should tell the client to allow up to 5 business days but it may be done sooner.

A quality submission counts

Following a lender checklist is a good start.

If you don’t submit the right documents, you can’t expect the lender to give you a quick approval.

The challenge is to convince the customer to give you everything you need.

You should consider how you do this based on your process and if you have a support team or not.

APRA’s recent meddling with the banks means that many banks ask specific questions with every loan such as to explain all enquiries on their credit file in the last 12 months.

The problem is that this isn’t on their checklist so if you don’t know the bank, you’re going to get a guaranteed missing info request.

Know when you need to give more than the minimum documents.

If there’s a weak point in an application, mitigate it up front with more documents.

We often provide a rental ledger, three month’s payslips and genuine savings for a loan where these documents are not required because we’re seeking an exception to policy.

If you want an exception, the deal has to be exceptional: give them a reason to say yes and you’ll avoid delays.

The best brokers with experience intuitively grasp when an exception can be obtained and especially when they can’t.

Managing expectations with purchasers

You can update your preliminary assessment and other documents to include some tips to help purchases to reduce the risk of buying a home and to make it a stress-free experience.

You might like to discuss or suggest to the client the following:

• Having a two-week cooling off period not a finance clause.
• Not committing to buy a property until they have a formal approval.
• Not buying at auction or off the plan without having a 20% deposit or if they’re not in a strong financial position.
• Not going overseas between signing the contract and settlement.
• Getting pre-approved before they start looking for a home.
• Organising an eight-week settlement period if you find their situation is complex and could affect formal approval.

These are general tips only to improve your home buying experience.

Refer to your conveyancer or solicitor for professional advice.

Speed should be part of your recommendation

We often find ourselves in a situation where we can recommend a quick lender or a cheap lender.

If they’re quick and cheap then in a couple of weeks everyone is applying with them and they either put up their pricing or their processing times blow out.

Include the speed to approve a loan in your recommendation and have a discussion with the client about it.

If it’s important to them, they’ll choose the quicker lender.

If it isn’t, then at least you’re on the same page that there will be some delays.