Householders with a mortgage need to make absolutely certain that their priority is to always make the mortgage payments. It is very dangerous if they let their mortgage repayments get into arrears, because if the arrears have been around for more than 3 months then no bank will step up to help them to refinance the property. The householder is seen as basically untrustworthy and too risky to take on as a mortgage client. The only solution for the client is to do whatever they can to repay the arrears as quickly as possible, and hope that they can convince the bank to continue to support them.
Judy Gray, mortgage broker at www.mortgagebrokersnz.org
This is one of the many questions that mortgage brokers need to pass clients before they agree to take them on, as some clients would hop gladly between banks if they thought they could get away with it. The truth is that the homeowner needs to treat their mortgage repayments there’s even more important than food, because they can always go to the food bank if necessary, but the banks will not help them if they have allowed their areas to hang around for more than 3 months. Visit this website to find out more about Upper Hutt mortgage brokers.
Often mortgage brokers need to be cruel to be kind, and they need to tell clients that they cannot help them unless the client can help themselves. The tragedy may be that the client has good equity in their property and has good employment and earnings history, but their creditworthiness will be defined by how reliable they are in paying their mortgage. They may need to find an urgent way to raise cash in order to eliminate their arrears, and this can cause a lot of stress especially if it was around Christmas time, but that is probably the only solution if they do not want their bank to sell their house under a mortgagee sale.
Mortgage brokers can provide clients with some advice, but they cannot perform miracles if the client has allowed their credit rating to degrade, and basically the client needs to fix their credit rating before the mortgage broker and the banks will be interested in them. This can be extremely stressful for the client, but it is the result of them not paying enough care in making sure that their mortgage repayments have been taken care of.
Some mortgage brokers specialise and handling these types of stressed clients, and they may have unusual solutions that they can apply to the problem. These brokers can’t find this a very lucrative niche, because they know that the client will accept virtually any deal they offer it means that they don’t lose their house.
There are many different ways of classifying the customers for mortgage brokers in New Zealand, but one simple way is to group the customers into non-distressed and stressed.
Kelsey Leep, mortgage broker
The non-distressed customers are generally looking for a bit of help to get a mortgage, but their circumstances are not troubling them and they may or may not proceed with a deal while they are working with the mortgage broker or even after they have been pre-approved for a mortgage. To find mortgage brokers in Rotorua click this link. These customers can be fickle, and it appears that on average only about 30% of these types of customers actually end up getting a loan, at which point the mortgage broker gets their commission. Brokers may spend days or weeks prodding and poking the customer and trying different solutions, only to have the customer change their mind and decide to postpone their house purchase or cancel it all together. Brokers dealing in this market have to be prepared for a relatively high failure rate, and even when success is guaranteed it may be two to three months before the customer takes up the mortgage and the broker gets paid. The broker’s cash flow management has to be pretty good.
Some brokers describe the non-distressed customers as “Mum and Pop” customers, and while the application process can be very straightforward and probably pretty boring, the fact that about 70% of these applications don’t complete further degrades this market sector in the eyes of mortgage brokers. Interestingly a very high proportion of those customers using the Internet to locate their mortgage broker are in the non-distressed category, and the small handful of very large broking firms that totally dominate this market (because of their high Google search rankings) need to have special admin staff to pre-screen the customers so that the less committed and the dreamers are weeded out upfront before the leads are passed on to the mortgage brokers.
The distressed customers are another group all together. In most cases the customers are in some financial trouble, possibly because of problems with rental properties or because of unanticipated expenses such as P contamination or a leaky home. In many cases if a tidy solution is not found then the customers may lose their property or go bankrupt or at the very least received a massive setback in their financial health. To find out more visit NZMortgageBrokers.org. A percentage of generally independent mortgage brokers specialise in helping these customers, and these brokers will generally have a trusted network of non Bank lenders and high net worth individuals. For the customer in general the most important outcome there’s a solution that stops then becoming bankrupt or losing their shirt, and they will have been turned down by a bank already. The brokers solution will generally involve more expensive money, but even a higher interest rate is way more acceptable to a customer than total financial failure.
Brokers specialising in this market can pick up leads by using Google Adwords and strategic ads that capture the attention of distressed customers. The banks and the large broking firms will generally not want to touch these customers, but for a competent broker this market segment can be pure gold. The customers will almost always take the solution that the broker comes up with, no matter how much higher the interest rate is, and the loan value will generally be a lot higher than for Mum and Pop customers because there is often large-scale refinancing involved. The brokers that service the sector can hide away out of sight of the rest of market and quietly make a killing.
Buying their first house can be an intimidating process for the average first time buyer, and they may need some good advice, some good coaching and encouraging, and some very good consultancy and assistance when applying for a new mortgage.
Carol Li, independent mortgage broker
Mortgage brokers are well placed to deliver all these for the first home buyer. Every loan applicant is different, and a smart broker will know all the right questions to ask their client in order to complete full discovery for the bank. The broker will need to know that they have all the relevant details, including an accurate assessment of their clients income, their borrowing risk, their banking history and their risk tolerance. At this early stage the mortgage broker will probably need to advise their client on what is the appropriate level of risk that they can take on board. Many clients are initially very ambitious about the type and cost of house if they want to buy or build, and the broker may have to give them a dose of realism if the financial risks look too great. This will probably involve advising the client to choose a lower cost house to buy or build, or even to wait for a period until their finances reach a more stable point. For more information, visit NZMortgageBrokers.info.
Once the broker has properly advise their client and has a very good picture of the accurate financial situation then they can apply to their chosen lender for pre-approval of finance. If the broker has done their job properly then they will have solved all the upfront problems for the client, and the pre-approval should be fairly straightforward. At this point the client is in a very strong position where they know they have finance and they know what they can pay, and this means they can go along to auctions and discuss and negotiate with real estate agents. The pre-approval is for a maximum level of finance, and in most cases the client will settle on a property for less than what they have been pre-approved. They may choose to still ask for all the finance, so that they have some cash left over to do minor improvements on the house. The smart mortgage broker will have already built this in to their original application to the bank, so that the client can for example build a new driveway or a new fence immediately after they have taken possession of the house.
The job of a mortgage broker is not just to apply for finance on behalf of their client but also to manage the process including the application and sometimes including the dispersal of funds to the client. A good broker will also stay in communication with the client, and check in periodically that everything is good financially, and even offer further advice when required. Many mortgage brokers keep their clients for years, and become the go-to person when the client needs further funding in order to do some developments on the house or even to change their house for example. For independent mortgages in Invercargill, click here.