Understanding client goals and supporting their future financial positions are the keys to locking in the right loan structure, says a Melbourne mortgage broker.
Evelyn Clark (pictured above), director of brokerage Everlend, said that offering your clients the opportunity to make changes to their home loan structure can save them thousands of dollars over the life of their loan.
“If a client needs to make a change to their property portfolio and you as their broker can assist them with obtaining the maximum tax advantages for them, it is important to connect the right product features to their home loan or to structure the loan in a way that any tax advantages are achievable for the client,” Clark said. “At the end of the day, it comes down to tailoring the right loan to the client in their circumstances.”
Clark said it was important to educate clients about the importance of their loan structure.
“All of our clients have goals when it comes to their home loans, so we need to explain to them why we are structuring the loan in the way that best suits their circumstances,” she said. “It gives them the confidence to know the reasons why this is unique to them. Some clients want to go with a particular lender or a particular lender's loan product, so as brokers, we need to go through a detailed process with the client to help them understand their options.”
Clark said at times, she had found different lenders were easier to work with when it came to structuring a client’s home loan than others.
“For the most part you will find the majors’ or first or second-tier lenders’ loan products are structured according to available funds,” she said. “Some lenders will structure in a way they will price on security of the property itself. As brokers, we need to make sure we know and understand all policies and procedures from the lenders on our lending panels.”
Clark said if brokers work through a client’s loan structure which had been cross-collateralised, where a client has multiple properties with lending against them and they are all linked together rather than having separate mortgages with different lenders, then this could potentially restrict the client.
“Cross-collateralising can become an issue when a client might decide to sell one property which is caught up with the other properties,” she said. “They might want to refinance one property individually or release equity against one property, which can be hard to work through. You can run into issues if the loan is structured in a way that is not correct from day one and the client loses any potential flexibility. As brokers, cross-collateralising can be complex and time consuming, so my advice is to avoid it wherever possible.”
