Franchisee reflects on his successful expansion over the past 12 years
Five years' experience with his aggregator has enabled him to observe some of the best brokers in the industry
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When it comes to helping first home buyers with finance, there is no such thing as a cookie cutter approach. Since first home buyers now stretch across a wide demographic, it is important for brokers to assess a range of considerations when helping these clients make their first property purchase. MPA spoke with ME Bank head of broker distribution Matthew Patterson for six things to keep in mind when helping first home buyers line up finance.
1. An empathetic approach
First home buyers often go on an emotional rollercoaster ride when purchasing their first property – which is why it is important to take an empathetic approach says Patterson.
He recalls when he and his wife bought their first property at auction as young parents. They went through anxiety, excitement, confidence, uncertainty and elation in the space of just two hours.
While this was just one evening, first home buyers can often go through this emotional tumult over a period of months.
He says if brokers are able to create a positive finance experience for their clients, the clients will be more likely to come back to them for any future purchases.
2. There is no such thing as a traditional first home buyer
When most people think of first home buyers, they envisage a young couple with a baby or one on the way – but this isn’t reflective of the current market, says Patterson.
He says a first home buyer could be a middle-aged divorcee looking to buy their own property or an older couple with several dependants. It could be someone with limited serviceability and a low deposit, or it could be someone with a high income who can service a sizeable loan.
“If you try and create a persona of what a first home buyer might look like you could possibly close yourself off from a whole range of different potential customers.”
3. Product considerations can vary enormously
Since there is no such thing as a typical first home buyer, there is also no such thing as a one-size fits all loan product, says Patterson.
“Different customers might not need all the bells and whistles that others might.”
While customers with tight serviceability may be better off with a basic product with low rates and no offset facility, others with better cashflow may benefit from a different type of loan.
The same could also be said for fixing interest rates, he says.
It is crucial to have a clear conversation around the different loan features a customer may require in order to find the best fit for their circumstances.
4. The longer-term suitability of a property is important
As mortgage advisors, brokers play an important role when it comes to educating their customers. Depending on the market, first home buyers can sometimes feel the pressure of urgency and be inclined to buy what they can without thinking through their long-term needs.
Having a conversation around the longer-term suitability of a property can help clients develop a well-thought out plan that takes into account the type of property and location they are considering.
This can help them avoid the added costs of needing to sell unexpectedly if life throws them a curve ball.
5. Knowing the grants and the market goes hand in hand
Competition for stock has been fierce recently, says Patterson, with properties in some regions selling like hotcakes.
“Houses at an affordable entry point are a hot commodity at the moment. The stock that is on the market is moving really, really quickly.”
This sort of market can be the difference between success and missing out for first home buyers who have worked hard to save a deposit.
“That 5% that you have scrimped and saved isn’t enough all the sudden, and that can change week to week depending on the market activity in the particular suburb that you’re in.”
“So being right across the detail of the availability and the eligibility of the various grants is pretty important.”
6. Being well informed is key
For those who have never purchased a property, uncovering all the finer details of what is involved can often feel like climbing a mountain. It is important for brokers to be well-informed so that they can easily answer the many questions their first home buyer clients will ask.
“The affordability piece is high on the agenda of government, lenders and LMI providers and everyone’s coming up with different offers to try and help first home buyers get into the market.”
“I think a lot of first home buyers want that advice and even reassurance that what they’re doing is the right thing.”
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