5 ways custom lending is the same as prime

by Rebecca Pike19 Jan 2019

Liberty is encouraging mortgage brokers who usually stick to prime loans to explore diversifying.

Group sales manager at Liberty, John Mohnacheff, says the way brokers approach prime lending should be no different to how they approach seeking a custom solution.

He says many of the perceived differences between custom and prime lending are just myths that need dispelling and lists five distinct similarities brokers should know.

The first of Mohnacheff’s five points is that the fundamentals of the loan don’t change.

He said, “While customers all have very different needs, loan products themselves have more similarities than differences. In each case you are considering the loan amount, security property, LVR, fees and features.”

The second point is that the process is the same for either application.

“You go to the customer, understand their position and then lodge the application with the lender. The process is the same.”

A third and important point, particularly following the scrutiny the industry has faced, is that both require the same high level of integrity and compliance.

Mohnacheff said, “Brokers must always remember in the eyes of the regulator or the consumer, a mortgage is a mortgage, there’s no difference between custom and prime.

“All customers must be treated with the same high level of integrity and compliance.”

The fourth point is that brokers should market to customers in the same way, regardless of whether they are a prime customer or need a custom solution.

“Think carefully before pigeon holing yourself into a narrow market segment. The role of a broker is to provide choice and help customers seek a financial solution for their situation.”

Finally, the fifth point is that both provide huge benefits to a broker’s business.

“You’re building up a reputation as a trusted credit adviser. Your business is going to reap the benefits of appealing to a wider range of customers.”

Mohnacheff said brokers need to stop thinking one was more difficult than the other.

“It doesn’t matter what the loan is, it’s your ability to help the customer that matters,” he concluded.