Listening time: 2-3 minutes
Start rating: *****
Australian Credit Licence CPD
No-one likes being at risk of rejection in life, including the prospect of having a loan application declined. And the situation can be unpleasant on the other side too, for the mortgage broker having to broach the subject!
In part 3 of our 3-part vlog series, mortgage industry adviser Therese O’Neill shares 4 avenues for helping clients get their finances in order and increase their chances of application success – solutions that can turn awkwardness into smiling faces all around.
'Welcome back to part 3 in our series. Previously we covered off the top 5 tips to help you get a more accurate picture of your client’s spending habits.
This series today we’re going to cover off how to have THAT conversation with our over-spending clients.
Let’s put ourselves in their shoes. It is human nature to underestimate how much we spend so your clients are not being deliberately deceptive.
We need to use empathy and active listening skills to ensure that they truly understand what is it that we are asking of them, for example:
Now Larissa “You mentioned that you guys spend about $3,500 a month in total on living expenses. I had a quick look through your last 3 months’ banks statements, and I'm getting from those spending of around $6,500 a month. Now, that's nothing usual Larissa, a lot of my clients overestimate how much it is that they spend. I was wondering if there was any one off big tickets items that you might have purchased in the past 3 months that we can adjust for. Or should we go back and increase those living expenses a little".
Now we do that! What happens when the client can no longer afford the loan they that want? Well, we don't just reject them. Of course, as Professionals, our clients are coming to us for alternatives and solutions. So here are 4!
1. Go with a different lender. Perhaps a lender that has a lower assessment rate or a 40-year loan term?
2. Reduce the amount of the loan they are seeking
3. Reducing credit card limits, we could cancel credit cards or pay off personal debts that can boost their borrowing capacity
4. Or lastly they need to change or reduce their spending habits and they need to do that over the next 3-6 months. Come back to us with a different set of savings accounts and we could go back to a lender and apply for a loan amount that they are truly seeking.
If you've missed part 1 and 2 of this series jump on the links below.
I’m Therese O’Neill, Industry Expert and contributing author to Finance Education Professionals. Thanks for listening".