Lender introduces cash 'diet' to help broker clients pay of home loans faster

by AB30 Apr 2013

Boutique home loan lender Crown Money Management says it’s shifting the focus towards brokers, offering a unique debt-reducing money management program that helps clients reduce debt and pay off their home loan faster.

Recognising the need to offer a specialist debt-reduction product, Crown Money Management CEO, Scott Parry, says that while the model of setting up the client’s mortgage so that their income is working for them is nothing new, Crown Money Management’s customer service and money management system is what makes the product unique.

“Crown manages the brokers clients’ weekly cash flow, ensuring they have enough cash to meet their set living expenses so they don’t blow their budget.  It’s like going to a gym and having a personal trainer; Crown acts as a personal trainer for the clients’ finances.”

Parry says the model reduces impulse buys and is based around a cash ‘diet’, which means no credit cards.

“The secret is to make people conscious of their spending,” he says.

Crown Money Management also personally contacts clients every month and provides them with annual debt reduction and equity reports, highlighting how the client is tracking on their quest to becoming debt free.

Melbourne-based broker, Martin Bennett, of Bennett Financial Group, says that in the first few months he’s already had five clients take up the offer.

"The benefit of this product is it forces a discipline of debt reduction. It's like any goal. If you had a goal to lose 20 kilos, it is easier to lose it with a personal trainer than on your own. It is such a simple concept of paying yourself a weekly allowance. When your paycheck comes as a big chunk each fortnight or month, it is easy to look at it, and think you've got a lot of money. It is just about teaching yourself to live within your means.”

He now recommends the product to homeowners who want to pay off their home loans faster.

"I ask the question about what their personal goals are. If their goal is to pay their mortgage off quickly, I suggest the product.”

“Unless they’re an investor,” he says, “most people want to have their house paid off. It is more about educating the client about how to pay their mortgage off as quickly as possible.”

Bennett says the majority of clients he sees are ‘the average mum and dad’, bringing in $80-90,000 a year, with a mortgage of around $350,000-$400,000.

For this kind of family, he believes Crown Money Management can help them pay off their mortgage in eight or nine years; half the time it takes the average mortgagee.

In the traditional model, says Bennett, the customer earns 0.1% interest on their investment and the bank charges the customer 6% interest on their loan.

But with Crown Money Management,'s scheme the client's salary is paid directly to the mortgage account. Crown Lending transfers the customers’ set living expenses into their savings account and the customer instantly pays interest on a lesser amount – the sum of their loan minus their salary. By reversing the flow of their money, customers save 6% interest, or earn 6% interest on their salary.

 

 

 

COMMENTS

  • by Country Broker 30/04/2013 11:13:14 AM

    This has been tried before , nothing new here , there were companies doing this for a big fee , consumers eventually could not wait to get out

  • by VB Lendahand 30/04/2013 11:56:27 AM

    These systems can be good for clients who show self discipline however the budget needs reviewing as people move through different life cycles. So long as the fees are realistic I would consider for some clients. Possibly good idea for first home buyers trying to qualify and prove savings to Mtg Insurers!