Advisors are not enough to rely on bank calculators
Many mortgage advisors rely too heavily on the bank’s UMI calculator when submitting a mortgage application.
Wednesday, April 5, 2023, 4:00 p.m.
Sally Lindsay
Derek Mayne, a former self-employed mortgage advisor and banker who is now a compliance consultant and director at Rosewill Consulting, said advisors should test whether clients can afford to pay their mortgages and repayments. says.
Mayne says using the bank’s UMI calculator isn’t enough. “Using the UMI Calculator, you just tell the advisor how much the client can borrow, it doesn’t take into account the client’s lifestyle or if there are any changes.”
He said that when mortgage advisers sign a transfer sheet to finalize a bank loan, they are confirming that the client can make the loan.
Mayne was told last year by an adviser that considering affordability was a mistake.
Shortly after the advisor came back to him and confirmed that he needed to change his approach. was shown, but within three months the client came back and said he could not pay off the existing loan.
“The advisor went to the bank and said his client needed to make changes. Told.”
Mayne said the bank’s UMI calculator shows what you might be able to borrow. “Mortgage advisors need to show how their clients can pay off their loans.”
For example, if a buyer pays $500 a week in rent, saves $250 a week, and wants a mortgage with $850 a week in payments, they can probably afford to buy with the right mitigation. he says.
However, an advisor whose client makes $80,000 a year, lives with his parents, has no savings, has a home security deposit given to him by his family, and has an average overdraft of $100 a week would not apply for a mortgage. you shouldn’t.
Mayne says many difficulties arise for advisors when a client wants a home but is unwilling to settle for the second best option. “They say they can afford it and the UMI calculator says they can, but after a while they realize they can’t pay it back and want to change the loan.”
What many mortgage holders forget is that they still have to live, he says, and the hardest thing these days is rising interest rates, utility bills and food costs.
Mortgage sales are negligible, but there are many more, according to Maine.
“More than ever, mortgage advisers need to keep a proper diary and fully complete the recording of their advice and the process behind the advice.
“I think when an advisor hands over paperwork to finalize a bank loan, they should provide information about client conversations and affordability discussions. and must include a note confirming that it does not cause financial hardship.”
Mayne says it’s important that advisors do this. Because if there is a problem with the subsequent payment, it shows that a discussion took place and the client acknowledged this.
“By this time, the client doesn’t remember the conversation from a few months ago, but a note has been written of the advice given and the client’s understanding.”
Mayne said that when he worked as a bank advisor evaluating advisor loans, some of the files he reviewed were not up to par. His work in risk and compliance has led him to assist several advisors with the quality of loan documents and records.
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https://www.goodreturns.co.nz/article/976521561/relying-on-banks-calculators-not-enough-for-advisers.html?utm_source=GR&utm_medium=rss&utm_campaign=Relying+on+banks%E2%80%99+calculators+not+enough+for+advisers Advisors are not enough to rely on bank calculators
