Updated: Feb 1, 2019
If you have lodged a loan application in the past six months you will be very well aware of the heightened, some might say hysterical investigation around your clients expenses.
Our lender partners are looking very closely at your clients spending. They are reviewing closely their bank statements and cross-referencing back to their application. Chances are you have experienced a little push back from lenders on this topic.
Many lenders are going back to the broker asking for more detailed information on spending. You, in turn, are then required to go back to your client and ask for more detail. This can look unprofessional and at best it is an unnecessary delay and somewhat time-consuming.
My suggested response to this processing posterior pain is to make the most of it. Embrace it even. It is an opportunity to work closer with your client. To gather more information about your client. And of course this extra information can be used to build a closer relationship, to cover compliance, for marketing purposes and of course it will get your application approved faster.
Obviously collecting a complete budget from your clients is a little more time consuming. However, those mortgage advisers that have been doing complete budgets with their clients for a while will attest it promotes a much closer relationship with your client. If you know their car lease ends in eighteen months it may be an opportune time to engage with them. Similarly, understanding the insurance premiums they are paying can help with cross-referrals or allow you to assist.
To help manage this hefty data collection our iWEB solution allows you to send your clients a link to the My Budget tool. The My Budget tool is a complete income and expenses form online. Your clients can complete this form and see graphically where their money goes. Your clients can choose to send the this form to you. The completed clients budget is sent to your linked iLEND database. Your clients income and expenses can be run through Maxcap serviceability calculator within seconds. If you are using another servicing tool you can transfer the data using the import option if available. Either way, you have your clients complete income and expenditure data captured.
As your clients are completing their My Budget they do not need to get out their calculator and translate their bills into monthly or weekly figures. They simply fill in the information as they know it. Just enter their fortnightly salary - before or after tax, enter the monthly internet bill, the quarterly water rates and the annual car insurance. All the figures can be converted automatically to any period preferred.
Another important feature is the ‘discretionary expense’ button. This allows you or your client to mark an expense such as donations, as discretionary which won't be included in the serviceability worksheets or their Maxcap.
A key factor in this process is that you have sent your client to your own website to complete this form. Driving or linking clients to your own website - not your aggregators or your software suppliers should be behind everything you do online. Directing traffic to your website will grow your ranking on Google. It also makes a dramatic impression on your client and their view of your professionalism.
Having collected this information direct from your client and having your iWEB system store the data - you have completed a major compliance hurdle. Your iWEB system records the IP address of the computer that completed the form, which may come in handy should you need to prove where you sourced the information.
So I guess where I am coming from with this chat is that although the tightening of lending practices by banks can be a painful, but in the particular case of expense budgets there is a real opportunity for you to derive a business benefit. The opportunity you now have includes:
Increase the speed of your approvals
Decrease chance of decline
Build a closer relationship with your client
Build a stronger client database
Increasing your professional presentation to both your client and the lender
Increasing traffic and in turn Google ranking of your website
Cleverly tick-off compliance
Getting on the front foot and changing your business systems can make this problematic change in lending practices turn into a big plus for your business with far more pro’s than con’s.