A mortgage broker since 2006, Madhu Chaudhuri runs Sydney brokerage Finance & Mortgage Solutions. The MFAA 2018 Residential Finance Broker Award winner and former architect answers questions about referral networks, diversification, loan turnaround times and market share.
Q: What’s the best way for mortgage brokers to build a referral network?
A: The referral network is an organic process. It can go from attending Rotary fundraising barbecues where you meet the community, to children’s school fetes. It’s very important to be true to your passions so that when you meet people you are going to invest in meeting them, and once they trust you, business just keeps coming. I am always looking to refresh and grow my referral partners – markets change and it’s very important to be front of mind by attending as many public get-togethers as possible, because that soft touch of networking in similar circles is very reassuring to partners that you are trustworthy.
Q: How do you keep clients happy if lenders are taking a long time to turn around their loan applications?
A: Being up front about the best interests duty and the fact that you are going to a lender who is closest to the client’s preference, and explaining that there is no timeline expected as currently the service level agreement keeps moving. It’s about understanding that if it is a refinance it may be OK, but explain clearly that a purchase may be lost going to certain lenders with SLAs that are blown out. It is very disappointing to see that whilst the broker market has helped retain the competition in the market with small and niche lenders who are well supported by brokers, we are increasingly on the back foot, with different turnaround times between branches and brokers in many banks. The market may change with fintech and private lender panels increasing.
Q: Brokers are at a record market share of 60.1%. How can the broker industry further grow market share and educate the public about the benefits of using a broker?
A: I started broking in 2006 when the market share was less than 30%, and whilst we continue to have channel conflict and bad SLAs in the broker segment, the broker share will grow because, one, we are constantly educating ourselves, and two, we are trying to help the client have a better financial outcome. This is because we work with several specialists in our team who educate and help the client make better choices.
Q: What advice do you have for brokers wanting to diversify from residential into commercial?
A: Commercial broking is as simple as learning to do more of the self-employed residential home loans. Give it a try and you will be surprised how easy it can be. The only thing is that it does not simply work on loan-to-value ratios; it also works on understanding industry segments and risk mitigation.