FinSecure has eliminated clawbacks on its full-doc loan product and introduced options requiring only one year of financials for self-employed clients.
The decision comes as the Sydney-based mortgage manager goes “full steam ahead” in terms of growth and product development, according to executive officer Matt Fernihough (pictured above), with five new offices expected to launch this year.
“The full doc no clawback loan is a huge win for brokers,” said Fernihough. “While there’s no clawback alt-docs on the market, we’ve introduced it on the average mum-and-dad loan.”
A clawback-free product suite
While other mortgage managers may have reduced clawbacks, Fernihough said FinSecure has developed this product with a specific solution in mind.
“Where previously the broker may have had to walk away from a deal as they know the facility is short term, they can now provide a well-priced favourable solution to the borrower,” he said.
For example, imagine a broker who has a client that wants to buy property as an investment, renovate it, and flip it within one year.
“The broker would generally turn around and go: ‘You're better off going to your bank to do it’, because unfortunately they know that they're going to get 100% clawback on the deal,” Fernihough said.
Essentially, it’s not a viable option for the broker to do the loan for that client, knowing that within a year it’ll be clawed back.
“Having a full-doc no clawback option gives the broker the opportunity to not walk away from the deal and gives them a well-priced solution with a great credit policy,” Fernihough said.
With the announcement of the clawback-free full-doc product, FinSecure now has a no clawback solution across all of its loan types, including alt-doc, SMSF, commercial, business, expat, and foreign borrower loans.
Only one-year financials for self-employed clients
In conjunction with removing clawbacks for brokers, FinSecure has also fine-tuned its credit policy to make it easier for self-employed borrowers.
Having two-year income requirements for the self-employed is generally the norm for most Australian lenders and mortgage managers.
However, with businesses suffering through multiple pandemic-induced lockdowns and reduced foot-traffic across the country throughout 2022, many business owners are facing reduced borrowing capacity.
“So many businesses didn’t reach their full capacity in 2022. These results might not look that favourable to a lender,” said Fernihough. “But things turned a corner in 2023, and these results might be more in line with their true earnings.”
However, most lenders would average out the two years when calculating borrowing capacity, leaving business owners at a disadvantage.
“It affects your choices and the options you have,” Fernihough said. “Even though the year that’s higher is more reflective of a proper year of trade.”
Fortunately, FinSecure’s credit policy has been extended so self-employed clients only are required to provide one year of financials.
“It’s only fair for self-employed clients, who have had a tough time of it lately,” Fernihogh said.
Resurgence of the mortgage manager
Part of the reason behind FinSecure’s recent expansion, according to Fernihough, is that brokers are starting to realise the company’s approach to policy development.
“I don’t want to create products that are gimmicky and get clicks,” said Fernihough. “We are releasing products that have a solid credit policy behind the scenes and are flexible.
“I want to be able to convert and offer brokers a niche solution that’s truly ready for market.”
Fernihough said he envisions FinSecure as the “resurgence of the mortgage manager” – there to deliver a premium back-office support service to brokers.
“We are an extension on the brokers business, assisting with following up missing info with the client to chasing return of mortgage documents, for example,” Fernihough said.
“We value the partnership with our brokers and strive to deliver a premium service that reflects well on the broker and their decision in recommending FinSecure to their clients.”
What do you think of FinSecure’s move to cut clawbacks? Comment below.
