Last week, one of our brokers rang me. Roger (not his real name) asked me how does he get accredited with a commercial lender, as he had a client asking for a commercial loan.
Roger says, “he needs a commercial loan so he could buy a commercial property.”
So I asked Roger, tell me more about the scenario?
It turns out that Roger’s client was looking at buying a commercial property, a retail shop.
And because the client wanted to buy a commercial retail shop, he obviously needed a commercial loan to fund it. So he rang Roger to get a commercial loan organised.
But the client also owned a residential property that was valued at around $2 million, with not much debt against it.
After some discussion, we worked out that Roger could structure a loan using the residential property as the security, with the use of the funds to purchase the commercial retail shop.
Doing it this way meant that it was no longer a “commercial” deal. It was now a residential investment loan, secured by a residential property, to purchase a commercial retail shop, at residential investment home loan rates.
The advantages meant the client could borrow at a less expensive rate, compared to a commercial property loan, with lower loan repayments and no annual reviews, and at a maximum 30-year term.
But it highlighted to me what we, as mortgage brokers, sometimes fail to do. Sometimes we make the mistake that we know what our customers want.
In the rush to get a solution, we sometimes do not ask enough questions of our clients. And we are guilty of not really understanding what our customers really want.
As Henry Ford was quoted “If I had asked people what they wanted, they would have said faster horses.”
My point is that sometimes our clients may not know what they want. Because they are not experts in this area, they may not know all the options available to them. Or they may simply not communicate their needs properly.
And as mortgage brokers, this is where our expertise can truly help our clients. But only if we know what their real goals and objectives are.
Roger’s client thought he wanted a Commercial Loan. But what he really wanted was funds to buy his commercial property.
And if we take the time to get to know the whole scenario, we may get a chance to provide better advice and a better overall solution for our customers.
The tip here is to get the full picture before we jump to conclusions. Ask lots of questions, and test our assumptions.
It is best to get all the facts and information before offering a fix.