Broker Tools - Advice Comments
It is the role as a responsible lending broker is understand what your clients wants and needs and then recommend the most suitable choice of products you can.
When you get audited, the auditor will want to see how your reasons for your recommendation and what analysis you have completed to justify these recommendation. It is essential you document this decision process and the best place to document it is within VowNet.
Broker Notes & Loan Recommendation Documents
If entered correctly in VowNet, these advice comments can also become very useful content for completing Brokers Notes to' the lender and your Loan Recommendation Document you can send to the client. ie "The PRODUCT – was chosen as it suited the client’s needs and preferred lender"
Below are some examples that can be referred to.
CARE - these are examples only and you should use your own reasons. Remember to be as specific as possible in your reasoning. Examples are therefore a guide only:
Examples of reasons to recommend a LENDER:
LENDER – was chosen as the client’s choice of preferred lender
LENDER – was chosen as the client’s existing lender
LENDER – was chosen as they had a policy niche which suited the clients requirements
LENDER – was chosen as the client’s wanted the lender's product
Examples of reasons to recommend a PRODUCT:
PRODUCT – was chosen as it suited the client’s needs was their choice
PRODUCT – was chosen as it suited the client’s needs and is a cheap option
PRODUCT – was chosen as it suited the client’s needs and preferred lender
PRODUCT – was chosen as it had a product niche which suited the clients requirements
"The client was presented with a number of different lenders/product to choose from and ultimately the decision was the clients"
Examples of comments for BORROWING CAPACITY:
STRONG – Client has a strong surplus cashflow position to meet lending commitments.
GOOD – Client has a good surplus cashflow position to meet lending commitments.
CARE – Client has an adequate surplus cashflow position to meet proposed commitments.
CARE – Client has requested a LOW DOC loan as they cant provide their most recent financial statements
Examples of comments for DEPOSIT/EQUITY
STRONG – Client has a very strong equity position.
VERY GOOD – Client requires a loan less than 80% and has proof of savings.
GOOD – Client has the ability to meet proposed lending.
CARE – Client’s deposit is less than 20% and may require LMI, Gift or parental guarantee.
Examples of comments for CREDIT HISTORY
GOOD – Client has no known credit concerns and excellent account conduct.
CARE – Clients has some small arrears which have been justified and explained.
CARE – Clients have recent default. A detailed explanation is included in Brokers notes
Please add if an Equifax report has been included or not
Examples of comments for SECURITY
SECURITY – The property is a standard freehold property
SECURITY – The property is a standard strata property
CARE – The property is company title
CARE - The property is an off the plan purchase
Examples of comments for LIVING EXPENSES
EXPENSES - The client provided their own living expenses via an online survey
EXPENSES - The broker interviewed the client to calculate their estimated living expenses
EXPENSES - The have not been discussed yet
Examples of reasons to recommend a FIXED RATES:
CHEAP – Fixed Rate is a cheap alternative, client is aware of risks and restrictions
RISK – Client is concerned with rising rates & is aware of risks and restrictions
Examples of reasons to recommend a INTEREST ONLY:
INVESTMENT – Client would prefer to make principal reductions against personal debt
INVESTMENT – Client objective is to minimise holding costs to maximise tax deductibility
INVESTMENT – Clients is sophisticated investor requesting interest only to maximise available funds
BRIDGING FINANCE – Interest Only required for the Bridging Finance period
CONSTRUCTION – Interest Only required for the construction period
PROFESSIONAL ADVICE – received advice from financial planner or accountant
PERSONAL – Client wants to minimise instalment for a temporary period of time
PERSONAL – Client wants to convert loan to an investment property in the future, hence wants to maintain tax deductibility
Combined Industry Forum (CIF)
The CIF has recommended an increase in broker governance, specific to Interest Only Loans monitoring the following Key Risk Indicator*:
A broker's percentage of portfolio that is Interest Only, as an example of a product and whether for investment or owner occupier purposes
*Key Risk Indicators - would act as triggers/flags for potential poor customer outcomes.