By
A broker will have a number of big deals over their career but sometimes the biggest ones are those you can’t put a price on
THE SCENARIO
I met this client through a social media competition I ran in 2017, generating the lead from data collected from the entries and follow-up conversations. What really caught my attention was that, although they were a young couple with two small children, they had clear-cut financial goals to achieve.
To keep up with their existing commitments, the main applicant was working full-time as an accountant and also working a second job every weekend, rarely taking a day off – a schedule he even managed to maintain while completing his accountancy degree last year. His wife was a full-time mum and they wanted to spend weekends together as a family. However, finances were too tight after the arrival of their second child 12 months earlier.
With an eye for figures, they already knew how they could save some cash. They wanted to refinance their mortgage to improve cash flow and trim their household expenditure via an interest rate reduction and the consolidation of two small loans. These two simple measures would save them $800 per month – a transformative amount when money was so tight.
Finally, they wanted to remove the guarantor from their mortgage to show their family, friends and lenders that they were standing on their own feet.
THE SOLUTION
Despite their clear-cut and well-thought-out plans, an initial consultation with their existing bank brought little success, and the lender was unable to help, even with an interest rate reduction.
I sat down with them to review their finances and see what other options were available. After the initial review, I realised there were a few challenges: not only was servicing going to be tough due to the tightening of lending guidelines, but there was also a risk that we would fall short on equity. I was aware that some valuations were excessively low, and experience told me that we would need more than one valuation to ensure the equity position enabled the 90% LVR – and would subsequently reduce the LMI premium.
Bankwest was able to approve the loan, but servicing was tight. I put together a strong submission that clearly demonstrated the couple were currently managing their finances and were proactive and responsible borrowers. Bankwest was sold and we received a formal approval only a few days after submitting the application.
The solution covered everything the couple were hoping to achieve. We dropped their rate by more than 0.5%, and we consolidated their two small personal loans into the home loan. As a result, their cash flow improved in excess of the $800 per month target, and the cherry on top was they no longer had a guarantor involved in their loan.
THE TAKEAWAY
This deal didn’t require an overly complicated strategy, or months and months to work through. Despite the small hurdles, it was a straightforward refinance that most brokers would easily be able to assist with, and overall it was one of my easier loans that month.
However, I have met many people over the years who have been turned away in these circumstances – by brokers and banks – and it would be very easy to have turned this family away due to the tight servicing and equity.
What I enjoyed about this deal was that the additional effort on my side changed life for them as a young family. In what has been a tough year for most brokers, including myself, this deal reignited my passion for my career and reminded me why I love coming to work every day: not to write home loan applications or research bank policy, or sit on the phone listening to hold music; I love coming to work as I get to help people and make a real difference in their lives.
Whether that is through helping first home buyers get onto the property ladder, overcoming complicated scenarios to get deals across the line, or just doing an ordinary refinance, helping people achieve their goals helps me strive to be the best broker I can be. In an industry where everything is measured on monetary value, it’s both refreshing and humbling to achieve an outcome that is truly invaluable to the client.
Harley Radovan
Founder and MD of Focused
Financemanaging
