The Derwent Finance director recalls how he helped a couple of first home buyers to transform their financial position and create the ultimate family Christmas card
Managing expectations is part and parcel of being a broker. It’s well documented that buying property is one of the most stressful life events, meaning expectations are high, emotions are fraught, and often the broker takes the brunt.
This happens to all types of buyers, but I have found that first home buyers in particular present their own set of considerations; they fall for the property before exploring their loan options, or they go it alone and get declined. Both of these factors impact on their ability to secure a loan.
Sometimes the clients will give up on the idea of buying a home at all, or at least delay for an extended amount of time. Sometimes they come to a broker for solutions.
This means that on a monthly, and sometimes even weekly, basis I have the job of explaining that a dream property isn’t financially viable for them at that time. As one can imagine, the clients are often less than pleased to hear this news. The outcome? The broker cops the blame.
But last year I met a couple of first home buyers who had been declined for a mortgage by their bank. They had two young children, both worked full-time, and they were angry and devastated that their property ambitions were slipping away. Given their personal circumstances and willingness to work on their goals, I was happy to take on their cause.
With a scenario like this, the best approach is often to take a step back, calculate what the client can afford and look at pre-approval options.
“The best approach is often to take a step back, calculate what the client can afford, and look at pre-approval options” Emmanuel Marios, director, Derwent Finance
As their broker, my first objective was to prepare them for another application. Step one in this process was to explain why the previous loan was declined and then help them to improve their financial situation.
Often this includes either myself or my support staff giving them what is effectively a household balance sheet, taking them through their spending and highlighting any problem areas that may exist. We then suggest changes and explain how these will improve their application.
As all brokers know, this process can take as long as two years, but these particular clients returned just three months into the exercise ready to go.
They had fully taken on board all our suggestions, changing their financial position as well as their attitude towards money. To say their new approach was transformational was an understatement – it was like meeting with completely different people. They were on top of everything.
Once again, they had found – and fallen in love with – their ‘dream home’, but this time, from their stronger financial position, it was possible to find a loan that matched their circumstances. This particular loan product was a non-specialist loan from MyState Bank at 90% LVR. They managed to obtain pre-approval, and the rest is history.
For me, the icing on the cake was receiving a personalised Christmas card from them. The picture featured the whole family in their new home, wearing their Christmas pyjamas. After all the hard work and challenges, it really was the best Christmas gift for them and a scenario I will never forget.
Often as a broker you have to take time to work with clients, educate and assist them and also keep their spirits up during what can be a challenging process, while dealing with the emotional fallout when there are bumps in the road. It’s just a part of what we do.
This work involved in this process isn’t always paid, but when it’s done properly it can transform a client’s life and then the rewards really come in the form of ongoing business and referrals.
Therefore, the main takeaway for me in this situation is that preparation is key, and often that preparation work means the most to the client. Secondly, cases like this demonstrate how vital brokers are to everyday Australians.
First home buyers are often the most challenging client profile, but they are also the most rewarding. If this family hadn’t had a broker assisting them through the mortgage process, they would most likely still be renting their home, and their financial situation and future would be far less secure. Imagine the impact of a fee-for-service for a client like this.