Even when armed with the full facts, broking a mortgage is no easy task. But when clients have financial skeletons in their closet and an impossible deadline to meet, the pressures stack up. Thuy Hook, mortgage broker at EZ Financing, explains
As all brokers know, each case comes with its own challenges, but it’s the curveballs that make life really colourful. Last year, I was approached by a couple in their early 40s who ran a door and window manufacturing business. They had bought a property at auction in Redcliffe, Queensland, for $700,000. It was their dream home, and they were keen to move in at the earliest opportunity.
They had $210,000 in cash from the sale of their previous home, which equated to 30% of the price of the new property, and they planned to cover the rest with a new mortgage. To secure this finance, they initially turned to their bank and were delighted to hear that the loan wouldn’t be a problem. But several delays during the application process led them to miss their finance deadline, and so with an extension out of the question, they made the decision to go unconditional on their contract of sale.
As they got closer to settlement, things started to get tense. With only five days left, their friend, for whom I had secured a loan previously, referred them to me.
I started to work on their case, but there were some skeletons in the closet. First, the delays with their bank weren’t as straightforward as I – or the husband – had been led to believe. Their application was actually declined because of undisclosed debt and late payments on credit cards. In fact, the wife had run up significant debts across 10 cards, which were all maxed out and accruing late payment fees.
I wasn’t the only one feeling the stress at this point –the couple’s relationship was also under strain, and the husband was keen to get this deal through so they wouldn’t have to pay default interest for failing to settle on time. I knew there were lenders out there who would take this deal, and I wasn’t prepared to give up.
I started by contacting BDMs to workshop the deal, making sure they were aware just how quickly we needed the funds to clear. They didn’t promise anything but said if I got the deal 100% correct upfront, then I stood a better chance. The pressure was officially on.
Within 24 hours, I was able to present to the clients all the options available. Because of the nature of their situation, the lenders I presented were all non-banks, and I clearly provided the rates, fees and repayments each offered.
Naturally, the clients went for the lowest rates and fees, so I spent all that Monday writing the submission, which was eventually lodged at 11pm due to their complicated business structure. Thanks to the BDM, by Tuesday afternoon we had a conditional, subject to valuation – but just as I was about to breathe a sigh of relief, the valuation came back … $50,000 short.
The client wanted to proceed, as she felt the valuer was being harsh, and the lender was excellent, approving the loan and drawing up the documents by Thursday. I rushed around getting the documents signed and witnessed, and returned them directly to the settlement agent that afternoon. The loan settled at 2pm on Friday, and the clients were delighted.
As difficult, stressful and seemingly impossible as this deal was at the time, I have received countless referrals from these clients, and today they and many of their friends and staff members are better off. There were three key wins for the clients, too: I recently refinanced their loan to a mainstream bank at a lower rate, a new valuation came back at $750,000, and they now have no credit card debt. All of these things have strengthened their financial position, but they also provided a learning curve for me. As I became aware of the size of the problem, I was careful not to over-promise. I simply made a plan as to how to approach each loan and identified the potential pitfalls, being careful to warn the clients of them, too. This way, there are no nasty surprises and the customer has more trust in you.
For any other broker who is facing a client or deal like this, believe in yourself – and of course, if needed, ask for help.