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Why Peter Ellis and Lending Mate are different

lending mate

Most businesses who assist borrowers with finance sell on price. “We’ll get you the cheapest rate!” they say.

From comparison sites to home loan ads, the primary focus is sprucing super low-interest rates with picture perfect people luring you in. It is almost like the rate is the only consideration – a low rate will solve all your problems and find you the perfect loan.

But when I founded Lending Mate, I decided to focus on something much more important to everyday real people – stress relief.

Not price, but stress relief.

A lot of brokers think that’s crazy. They tell me, “The only thing borrowers care about is rates!”

That’s partly true but mostly false.

Borrowers have been conditioned to focus on price. Why? Because it is all they see and hear when it comes to home loans. So generally, when I first meet a client, they too are fixated on price.

How does my current rate compare? Have you seen that super low fixed rate – is there a catch? Am I being ripped off by my lender?

However, once I take the time to get to know them, I discover what they’re after is a lot more than someone to find them the cheapest rate. What they are really looking for is someone who will genuinely look after them. Someone who will help them make the right decision to put them in a better place financially. They are looking for someone who is on their side to help them deal with the complicated finance process dominated by big organisations.

Please don’t get me wrong – I’m not saying I ignore interest rates. That would be foolish because obviously, rates are important. It’s just that they’re not the be all and end all because as I have so often found, juicy interest rates are meaningless if you can’t meet the strict lender criteria to obtain the interest rate.

The lack of transparency in lending causes people stress. Borrowers feel like they are only being told half the story, enough to get by, while what is actually going on behind closed doors is being concealed. Transparency is an essential part of the Lending Mate approach.

Lenders love to draw people in with super low-interest rates that in the fine print are “subject to lending criteria”. What people don’t realise is that only certain borrowers will qualify for those rates or that they come with often-annoying conditions. Yet, nowhere is the full list of who qualifies spelled out for borrowers. It is left for when you apply for you to be told “sorry we can’t help you” which can create a huge amount of stress.

Alarmingly, despite only telling people the bare minimum and hiding behind glossy ads that draw you in, most lending business is still directed towards on a handful of lenders. That’s great but these lenders don’t cater to a lot of peoples needs. We at Lending Mate work with a panel of smaller, reputable lenders that are not only more flexible but also know they need to work much harder to win your business.

Lending Mate’s transparency translates into honesty as well. We won’t stuff you around, won’t make promises we can’t keep, won’t make you jump over unnecessary hurdles, won’t pass you from department to department – and won’t make you tear your hair out in frustration. That’s the beauty of transparency – it’s a big stress-reliever.

The people that we focus on are borrowers who have been messed around by the system. They might have received an unexpected “no” from a lender that they have dealt with all their lives. Their circumstances may have changed and things might have happened to them, and for whatever reason, they are struggling with their financial commitments or struggling to get a home loan, and most of all know they need help.

Our approach is simple. We don’t rush into solution mode. We take the time to build trust, to really understand where they are coming from – unique stuff that has happened to them and what is causing them stress about their finances. That’s when they open up and explain how overwhelmed they feel. That’s when they let you know that while a cheap rate is good, what they most want is for someone to relieve them of their stress.

It is a bit like a counsellor. We ask a lot of questions; do a lot of listening. We really want to understand what individuals are going through, but never judge. It is not about right and wrong and it is definitely not clear cut in black and white.

When we understand the full story, we can then make recommendations. Explaining it in detail with full transparency means that they understand all the stuff that other people and lenders haven’t properly disclosed. They know that while the product I’m recommending might not be the cheapest, it will definitely be the one that suits their unique circumstances – at that point in time.

It’s such a relief to know someone has got your back. To be able to forget about endless paperwork, crippling debts, and bank rejections. The stress can just drain away and confidence and control replace it.

We keep in contact with our borrowers’ post loan settlement and find out how they are and how things have progressed. The really positive thing is painting a way forward – that once their circumstances improve we catch up for a review to see if they can move on to another lender with a more attractive rate and policy conditions. Looking after people for life means that we are not just there for a single transaction – but our role in looking after them develops as they do.

When I first started out, I was a Broker much the same as any other. I dealt with the full range of clients who often preferred the loans offered by big lenders that they had dealt with in the past or who advertise heavily. Did you know what I discovered? The borrowers I most enjoyed working with most were the ones that the big lenders were not that interested in. Those non-vanilla borrowers who had the trickiest situations and were feeling the most anxious.

These were real people with real lives. Not just the fairytale mum, dad and 2 kids standing in front of an idyllic house with perfectly manicured lawns. They were stressed. Coping with major life challenges. Struggling to come to terms with a relationship breakdown. Sick of bad stuff in the past holding them back and just wanted to get on with their lives. They were different. They were self-employed. Wanted to live somewhere away from major centres. On top of that, they were not earning an income dictated by the 9 – 5 regime.

A lot of brokers and banks just want to deal with the fairytale because it is easy. Anyone outside of this is often seen as too hard. They need hand-holding. They need solutions which are outside the norm. It can seem like too much work for too little reward. But that is where Lending Mate is different. We cheer for the underdog. It’s their life and I’m there to make sure they can enjoy it.

Eventually, I created Lending Mate so I could specialise in helping these real people. A cheap rate today won’t be the cheapest tomorrow. But stress relief will open up a whole world to people who currently feel trapped. That is what Lending Mate is all about.

Applying for a home loan – what to do if you don’t tick all the boxes.

Have you applied for a home loan lately? If not you might be in for a shock. A lot has changed in the past few years and it can come as a surprise. Especially for people who are upgrading or refinancing to access some equity to renovate or invest. Not only has the amount that the bank will lend you decreased. The questions you are now asked are a lot more extensive which can feel a bit invasive.

How well will you stack up in the eyes of the banks? Here are the top 10 boxes that banks want to tick when you apply for a home loan.

  1. Do you earn your income in the traditional 9 – 5 way?
  2. Is your loan for the home you live in?
  3. Will you be borrowing less than 80% of the value of the property?
  4. Are you aged 50 years or less?
  5. Have you lived at the same address and had the same job for quite a few years?
  6. Is your property a unit or a standard house on a block, in a metro or a large regional location?
  7. In the past few years, have you had limited enquiries for credit (like credit cards, car loans, personal loans, interest-free facilities etc)?
  8. Have you had perfect repayment history on any facility held with the bank (never been over the limit or overdue on any savings account, credit card or personal loan even if there was a valid reason)?
  9. Have you not suffered any issues like job loss, illness or divorce that has caused you financial difficulties?
  10. Do you have a clear credit history?

If you can tick yes to all of these, you are in demand and are in a strong negotiating position with most lenders. Your current mortgage facility could likely offer you reductions in interest rates in order to retain you if you threaten to leave.

If you ticked ‘no’ to some, you might find yourself in far less of a negotiating position. You might be shown the door if you threaten to take your business elsewhere or, after negotiating the purchase price of a property, your application may be declined or the bank may be willing to lend you a lot less than what you need.

Turning a no into a yes

Although you can’t do anything about your age or if the property you are looking to finance isn’t in the right location, there are a number of other boxes that you could potentially turn into a “yes” over time.

You could focus on paying more than the minimum and building up your equity, resisting the urge to increase your home loan to go on an overseas holiday, being vigilant about paying bills on time and not losing track of due dates, saving up and using cash instead of applying for credit etc.

Here’s the good news. It is not the end of the road if you are knocked back by your lender. There are alternative options out there, even if it may take you a few more steps to get you to where you really want to be.

Don’t panic: Don’t do anything rash like applying with a multitude of lenders hoping that one will say yes, but plan your next move very carefully. You need to be extra careful. Why? Because anything you do from here could damage your credit record. This could also provide more reasons for lenders to say no in the future.

Get help: Find someone you can trust that has the knowledge and expertise to find options for you. Ask about their track record. For example, have they found options for lots of borrowers in your situation in the past? What is their track record in helping them to get back on track in the long run? Also, get references. Do they have independent reviews or existing borrowers you can speak to that they have helped?

Knowledge is power. Understand what banks are looking for. Ensure that you tick all the boxes before you apply for a home loan. Instead, you can blindly proceed to apply, thinking that you are the ideal borrower when in reality any number of things can cause an application to be declined.

If in doubt give us a call on 1300 426 283 or email help@lendingmate.com.au.

Will multiple credit applications damage your Credit Score?

Lending mate-Compliments and Concern

Borrowing money at times is portrayed as being simple and easy. Click here, apply there, give us a call are all methods that can start the ball rolling. As finance is very interest rate driven, a good option today may not be good tomorrow so, at times, you may shop around.

The issue is that when you do this for credit it can do more harm than good. Why?

When you apply for finance the lender will do what is known as a credit check. This is where an enquiry is added to your credit file that is recorded for a number of years. While it may seem like a simple thing, doing so numerous times in a short period can impact your chances of success with any future applications for finance.

 

“Shopping around for credit and applying to a number of different credit providers within a short space of time may negatively impact your Equifax Score. It flags you as a greater risk than infrequent applications for credit with a few credit providers”
Source: Equifax

 

So what can you do to up your credit score? When you are thinking of applying for finance consider the below:

  1. What do you need the funds for?
  2. Are you in a position to apply?
  3. Have you asked the lender upfront if your scenario may suit them?
  4. Do you know the documents and personal details that you need to have ready to apply?
  5. Anything in your past that may cause concerns with an application?
  6. Have you had all your questions answered so you know you are making a fully informed decision?

There are many more things to keep in mind but just like when boarding a plane overseas or going on holidays, do a full check to make sure you are ready. You will be glad you did.

– Peter

Why should you follow the 5 C’s of credit?

Business Loans & 5 C's of Credit

While the post-crisis financing landscape has changed drastically and landing a business loan today is more challenging than it was, it’s far from impossible, especially if you make sure your business measures up to what bankers call the “five C’s of credit“:

Character

Banks don’t lend money to inanimate objects. They lend to business owners, and they usually want to know more about the owner than financial numbers. This means you and your management abilities. Do you and your key executives have a strong reputation in your community and industry? Do you treat your customers, vendors, and employees with courtesy and respect? This includes taking responsibility for your actions and the outcomes (both good and bad), as well as meeting all of your obligations, even when it might not be in your best interest.

Capacity

This means your company’s ability to safely assume more debt, a measurement known as debt-service capacity. Your banker will calculate a few key financial ratios with information culled from your financial statements to determine how much more debt your business can safely assume.

Capital

This refers to how much cash and hard assets your business has on hand. Your banker may calculate a measurement known as the cash-conversion cycle, a liquidity measure that combines several ratios derived from your financial statements.

The cash-conversion cycle will reveal how much working capital you need to run your business, without running out of cash. Also keep in mind that banks usually like to see that business owners are personally invested in their companies.

Sweat equity is one thing, but bankers tend to be more receptive to loan requests from business owners who have some skin in the game.

Collateral

Most business borrowers today will be required to pledge a secondary source of repayment, or collateral, in case they default on a loan.

Banks usually prefer hard assets (such as real estate and equipment) as collateral, because they can convert them to cash more easily if they have to, rather than raw materials or unfinished goods. If yours is a service business, you may be required to pledge personal assets- usually your primary residence- as collateral to support a loan.

Conditions

These are the economic conditions in the broad national economy, in your local geographic area, and in your specific industry. They will vary, of course, often considerably, in different areas of the country and in different industries.

While trade-exposed industries such as manufacturing and retail sectors are struggling in light of the strong Australian dollar, others- notably the resources industry- are booming, despite the overall sluggishness of the economy.