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Category Archives: Hawke’s Bay
Mortgage Brokers Hawke’s Bay
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The mortgage broking sector in Hawke’s Bay was elevated in 2008 to a more professional class, when the New Zealand government brought in regulations to force mortgage brokers to take difficult examinations, and then become part of a formal dispute resolution scheme and to list themselves on a new financial services register. The examination for the National certificate in financial services was difficult enough, but the obligation to join the dispute resolution scheme meant that the mortgage broker would have serious financial risk if they were found to have behaved unethically or incompetently in any dispute. Additionally, being listed on the Financial services providers register meant that the mortgage broker was now visible to everybody he or she had ever dealt with.
As a result of the new regulations, a large number of mortgage brokers in 2008 decided that it was either too difficult or too risky to continue in practice. Those that found it too difficult to study for and pass the examination were exposed very quickly, and this tended to eliminate breakers who were ex Bank Clerks and similar hoping to make a quick buck on their narrow contacts in the industry. Similarly those brokers who were accustomed to stretching the letter of the law to complete deals and get their commission also decided that it was too risky to stay in business, as they would undoubtedly fail in any dispute. Typically these cowboy brokers would exaggerate their clients financial success and ability to repay a loan in order to ensure that the client got their mortgage and that the broker got their commission.
The end result is that the industry in 2017 is stable and mature, and clients can generally shop around for a broker that meet their needs and the clients can be comforted that the regulations will help them if their broker behaves unethically or and incompetently. Mortgage brokers write between 20 and 40% of all bank mortgages, and so are a very important part of the property sector. Some are needed by clients who are otherwise unable to get a mortgage off their bank, and they are needed by clients who are finding it difficult to negotiate the tricky process of finding a mortgage, especially in Hawke’s Bay.
In some cases the process with the client can be very complex, and may involve the broker advising the client on special actions to take to make themselves a more attractive target for the bank to loan a mortgage to. In other cases the process may involve the broker advising the client on the realities of their situation, and advising them to perhaps curtail their ambitions.
In other cases the process may simply involve the broker finding the very best product and Bank or lender for their client, but this may involve the broker sorting through complex information from both the client and the lender or Bank. In all cases the broker must behave professionally, and must be fully up-to-date with the latest information from the banks and the latest market trends, plus most brokers will have their own inside contacts in certain lenders which gives them the inside running on special deals going.
For both commercial and residential mortgages, the broker will often need to provide specialist advice, and to liaise with other specialists in Hawke’s Bay or commercial buying process. This list will include commercial and Residential real estate agents, lawyers and solicitors, property valuers, business valuers and of course the banks and financial institutions. The advantages that an experienced broker will have over their client is that they are accustomed to dealing with these entities and they know how to present documentation and how to negotiate a good deal.
Mortgage brokers who are on top of their game will know exactly how far they can push a bank or financial institution, and they will know what questions need to be answered even if they are not asked. Search for the client in this situation is that they are placed on the front foot right from the get go, which means that they can be aggressive when looking for properties and entering into the negotiation process.
A competent mortgage broker will have good financial analysis skills, so that they can provide their clients with very good professional advice on what type and scale of mortgage they would be able to accomplish. Because mortgages can be packaged in such a wide variety of ways the actual task of choosing the best most appropriate package can be very complex for the client, and the mortgage broker has a vital role in this situation. Similarly Bank negotiation can also be complex, they may require that the mortgage broker provides complex information to the bank yes they will have to stand by in the future. Many clients will also need assistance with the actual home buying process, in particular liaising competently and confidently with real estate agents, lawyers, valuers and other parties such as building inspectors.
The Hawke’s Bay mortgage broker will generally take responsibility for completing a bank loan application forms, as the details can be complex plus a simple mistake could jeopardize the whole process. The goal of the mortgage broker is obviously to complete the successful application for a mortgage for the a client, and they often find themselves organising building reports, specialist valuations and even making sure that the property is adequately insured.
The reason most clients decide to use a mortgage broker because because they are finding it otherwise too difficult to obtain a mortgage by themselves, or to obtain what they feel is the best deal around. They can find the banks intimidating and unhelpful, and they almost always feel that they are going to get independent quality advice and assistance by going to a mortgage broker. The most common category of customers finding difficulty in getting a loan are first home buyers who might not have a mortgage history or adequate loan history with their bank. They not only need to be able to get a loan, but they also probably need Sound Advice on how much it is safe for them to buy.
Another category of clients having difficulty getting a loan are those who simply want to consolidate their current debts in particular are their mortgage in order to purchase a car or a boat or caravan etc. Often these clients need a dose of Reality about how much money it is safe for them to borrow.
For various reasons commercial and residential property investors tend to use mortgage brokers all the time, and in practice the investor will generally have a preferred mortgage broker on tap. In this case the mortgage broker will already understand their clients business in some detail, and the process for them to obtain a mortgage in some ways is to ” rinse and repeat”. These mortgage brokers or generally have a number of different lenders on tap, including second and third tier lenders for investors who need shorter term financing. These second and third tier lenders always charge a higher interest rate simply because short term lending is generally for development projects which have a higher rusk than normal buy-and-hold property projects. The mortgage broker must be competent in the areas of risk and finance, so they can get the best and safest deal for their clients, and this is naturally a very specialist area of mortgage broking.
Another specialist area there’s those clients requiring finance to start up a business, and in this case the mortgage broker will need to be able to understand the clients business plan and to properly assess the risks associated with that business plan before approaching lenders.
These days mortgage brokers Hawke’s Bay will be very conscious of repeat business, and many of them only too happy to provide good advice for free to potential clients, in the Hope and expectation that they will get good business off those clients in the future, either directly off the client or indirectly via word of mouth. Word of mouth is extremely valuable in this industry.
Like all aspects of the residential property business, the industry very definitely has its highs and it’s lows, depending on weather the property market is bubbling or not. For this reason mortgage brokers tend to put a lot of effort into finding investor clients that will provide them repeat business during a downturn. Life can be tough for a mortgage broker who is trapped with a less well known brand that cannot support them during a property downturn.
One of the key aspects that a mortgage broker must pay attention to is to ensure that they have a very detailed, accurate and up-to-date understanding of the range of products available from all the lenders that they do business with. A competent mortgage broker will also be in touch with his bank so that he or she knows of any special deals that are going that they can pass on to their clients. For instance in Hawke’s Bay today the reserve bank is requiring that banks only lend to customers what’s a 20 or greater deposit, although there are some exceptions. In the market today there are products with different interest rates that mean for example that a mortgage of $500,000 over 25 years could cost $210 very month less for the cheaper product then for the most expensive product. Similarly there are some banks that offer a Welcome Home package to a select few clients who do not have the 20% deposit, but this package is naturally more expensive.
They really good aspect of the mortgage broker industry in New Zealand today is that most brokers able to operate very effectively from pretty much anywhere in the country. Obviously some clients will require a face to face meeting with your broker in order to get to trust the broker, but most clients will not need this after they have exchanged emails and had a good long phone conversation with their broker. The fact that brokers can operate anywhere in New Zealand remotely means that there is a much bigger pool of brokers to choose from, whether you are in a small town or in a large city. It also means that those brokers with particular specialist skills have a much larger market that they can play in.
This type of remote operation obviously means that both the broker and the client need a good fast Internet connection, there’s a face to face Skype call maybe one of the smart ways to have the initial face to face meeting. Fortunately in New Zealand virtually the whole country is covered with high quality broadband aside from a few small rural pockets. New Zealand clients are also much more Internet savvy today and trust themselves much more than a few years ago to be able to reveal remotely with their professional adviser. One way clients will trust themselves more will be in the area of carrying out prior research before they contact a broker, and brokers need to be alert to the fact that their potential client may already know quite a lot about current interest rates and current deals on the market. The client will want to feel that their mortgage broker is at least one step ahead of them, which obviously put some pressure on the broker to stay informed and up-to-date.
Mortgage brokers dealing in the commercial property market and I’m well aware that the developers and commercial property purchasers are almost always pretty financially and commercially astute, and for this reason this sector of the broking industry is fairly specialist in nature. Residential property purchasers I generally a lot less informed and some are a lot less astute, but this place is an obligation on the mortgage broker to properly inform the client and to properly advise their client, and to not take advantage of any naivety on the client’s behalf. Outline the dispute resolution process provides a large enough disincentive to scare away any cowboy operators contemplating taking a residential client for a ride.
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