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- 2018 Commercial Lenders Roundtable
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Director of Hunter Galloway, Nathan Vecchio, started broking in 2015. Using the techniques from Joshua Vecchio's Top Broker Handbook, he’s been writing big numbers, leading to Vow Financial naming him Broker Partner of the Year Rising Star in 2016.
Each year it seems to be the same.
It’s like the banks pretend that this year, there won’t be a last-minute rush by buyers heading into New Year’s to get their homes settled. And sure as Christmas, SLAs start sliding and days turn into weeks for loan approvals.
Clients get grumpy because the approval you said was supposed to take only a few days could easily turn into weeks!
And whose fault is this… Is it the banks? No, it’s your fault as the broker.
Today we are going to look at why deal escalations are a complete waste of time, and what you can do to navigate the approval process this holiday season.
Why is escalating a deal a waste of time?
Okay, let me start with this point. I have a few good friends who work as BDMs across the banks, and they tell me a large proportion of brokers request that their deals get escalated even if they aren’t urgent.
(And let’s be honest, who hasn’t escalated a non-life-or-death deal in the past?)
But as a result, the majority of deals never actually get escalated and just get picked up in their normal SLAs.
Add to that the fact that different lenders have different types of escalations, so unless your customer is going to lose their deposit, chances are your escalation is just getting lost in the pile.
But why are most brokers escalating their deals? The majority of brokers are overpromising and under delivering.
If you have set the expectation to a client that it should take a day to get an approval and then it takes you a week, in the client’s eyes, you are a shocking broker.
The reality is that most clients don’t know how long it should take to get a loan approval. If you take time to explain that the situation is complex, that the bank is overrun with applications because of their great pricing [or insert other reason here], you’ll be able to lower their expectations.
And as a consequence, if the approval comes through in a week, you will look like a Top Broker. Remember, just because a lender’s SLA is three days doesn’t mean you should tell your client it will take three days to get an approval. I add 50% onto the banks’ SLAs.
From experience, the SLAs can blow out overnight with a strong enough offer and you will be left looking like a turkey in front of your clients, backpedalling from submission to settlement, which doesn’t make a good client experience.
If the bank says three days for initial approval, I tell my clients seven business days. If it happens in five days, I still look like a superstar.
Also, remember that the majority of deals are missing information. A high-quality submission doesn’t mean spending two days writing a credit memo. It can be as simple as following the lender’s own checklist.
Small things like missing a rates notice, or providing three months of day-to-day statements instead of four can really delay matters, not to mention annoy your client going back and forward.
I find getting everything upfront prevents any unnecessary extra exchange of documents. We use BankStatements and FileInvite to automate our document collection process and make sure we have more documents than what is required for most lenders.
Other common reasons I have seen banks request more information:
- Explaining propensity to repay
- Funds to complete statements are missing
- Outdated information, statements are over six weeks old
- Lender forms incomplete
- Insufficient loan notes
- Data entry errors in submission
- Postcode issues for high density or undesirable suburbs
- Veda enquiries not explained
- Servicing shortfall
- Bank not reading our loan notes!!?
We keep a register of the reasons the banks have asked for more information.
Each month we review these reasons with our brokers, and if there are common issues like explaining propensity to repay or data entry errors, we make sure we address these so they do not cause any roadblocks going forward.
Go beyond rates, and talk turn around
Have you ever found yourself in a situation where you can find a quick lender or a cheap lender? Have this conversation with your clients upfront.
Explain that while the lender is cheap it could take weeks to get an application approved because there are lots of other people applying at the same time.
And other lenders might be slightly more expensive but can turn the application around much quicker. Buyers might be happy to get the loan approved quickly so they can negotiate a better deal on the purchase price.
Find out what your client prefers and make turnaround time part of your recommendation.
This has been republished with permission from Top Broker. Top Broker's vision is to rally mortgage brokers from across Australia to share the industry's best practices to help brokers maximise client value, reduce their working hours and increase their overall settlements and profitability. Check out more at: https://www.topbroker.com.au.