Sell HOME LOANS easily by busting these 3 MYTHS
3 Myths that if busted during a conversation with a prospective home buyer who is looking at financing options will definitely seal the deal:
Many home seekers think if they approach a bank directly rather than avail the services of a Mortgage Brokerage firm (like Square Capital) they can get a better rate for their home loan. However this is far from being true.
Like any lending business, Banks look for volume, relationships and ease of doing business. Channel partners (Mortgage brokers) offer all of these to Banks.
On a daily basis Banks get huge volumes of business from Mortgage Brokers, and Mortgage brokers do the legwork of ensuring that paper work for the loan is in order for speedy processing.
Mortgage brokers are in regular touch with multiple Banks & NBFCs and are aware of the latest offers, processes and exemptions/deviations in each of them. This in turn compels Banks to go the extra mile to provide the best deal to their Channel Partners to avoid business going to their competing Banks.
Hence, if there is a better rate, exemption or deviation; channel partners like Square Capital will have better access and negotiation power than any individual borrower.
Additionally, approaching multiple banks negatively affects a customer’s credit score (CIBIL SCORE). Loan experts like Square Capital are aware of the processes and exceptions and can narrow down the search for a loan to just one or two banks which offer the best deal.
Here some customers might not be totally convinced as they might believe they have a premier relation with bank. Here is where the second myth lies …
Many home buyers think if they are privilege/wealth account holders of a Bank and have had good banking relationship with the Bank they will get the best rate from that Bank. Sadly, even here it boils down to volume and repeat business for the Bank.
Secondly, majority banks operate in a fashion where their Asset (Lending) and Liability (Banking) divisions are completely different and at times Channel Partners of the respective divisions might be in better sync with processes and systems and enjoy better negotiation power with Credit Managers of the lending team than internal Wealth/Relationship Managers.
In case of Loans sourced from the Wealth Management division, the Bank is very well aware of the comfort the client has with the Bank; the entire pitch would therefore revolve around ease of functioning; and maybe a discount on the processing fees would be offered on account of loyalty. That is however a small one-time cost benefit (around 15-20K) as against the savings that even a marginal reduction in the rate of interest can generate over the tenure of the Home Loan.
Once both these myths are busted the third and most important myth might be an eye-opener for many. Especially those who have in the past or are currently repaying a home loan will resonate with the third myth very strongly.
Home Loan seekers do a lot of research and study while taking a Home Loan; however once it is through and the loan is being serviced they don’t bother to review their Home Loan periodically.
Having serviced a home loan for a few years the borrower is in the best position to negotiate for better rates as he/she now has a proven history of repayment. He/she might have also had an increase in income which drastically improves creditworthiness for refinancing an existing Home Loan.
In this scenario, like any lender a Bank will not proactively call up their customers to inform that home loan rates have reduced or that based on their track record they can re-negotiate their home loan at a lower interest rate. Logically thinking, no one wants a high paying customer to start paying lower.
However, the hugely successful loan restructuring workshop conducted by Square Capital in Mumbai (roughly 200 Crores of Home Loans were refinanced in 2 days only!) shows the huge business potential in recommending refinancing to existing Home Loan clients.
Square Capital ensures that a customer’s interests are ensured while taking a brand new Home Loan as-well-as in refinancing or restructuring an existing Loan. It is a classic Win-Win scenario ensuring the best deal or huge savings for the customer along with increased ROI on the property itself and business for Square Capital.
Click here to read and understand refinancing of existing Home Loans
