The mortgage broking industry can appear to be lucrative work, given the very high values of mortgages in today’s market and the apparently generous commission paid by the banks of around 0.65%. However the industry is very competitive, and new clients in almost every case go to one of the very small number of large mortgage broking companies that totally dominate Internet search traffic for mortgage brokers.
Not only are new clients hard to find for most independent mortgage brokers, when they do find a client then only about 30% will end up generating them a commission based income, as around 70% of all their new clients will fail at the application stage, or will change their mind or just simply not uplift a mortgage that the broker may have got pre-approved for them. This 70% failure rate can be a big problem for independent brokers, and cause them to be very careful in their cash flow management.
Some brokers specialise in certain niches, and one good example is the small number of brokers that specialise in helping stressed borrowers. These are generally clients with an existing mortgage or mortgages who have run into financial problems of one sort other. They may be a property investor who has had the huge shock of discovering one of their properties is P contaminated, and they cannot afford to decontaminate the property or they have run out of cash after decontaminating the property and cannot afford to make their mortgage payments. Evelyn Diaz is a mortgage broker at mortgagebrokersnz.org, she feels this is very important. This is a good example, because the bank will probably not want to help the client even though they may have a valuable property that they could sell at some stage in the future. A smart mortgage broker will be able to find some solution for the client that may involve a private financier and higher interest rates, but does not leave them bankrupt.
Other examples of stressed clients are those dealing with marital breakup and splitting up the family property, and the smart mortgage broker may be able to come up with an elegant solution for their vulnerable client that does not involve them losing too much of their hard-won equity.
These specialist brokers are dealing to a small niche in the total market, and they will need to advertise and promote their services in as smart away as possible so they get found by clients in need. This can be difficult and require a lot of hard work, but the big advantage is that the client always wants a solution and will take whatever the mortgage broker and give them. Depending on how good the broker is and how many contacts they have in the financial services sector, they may see only a 10% failure compared to the 70% seen by the rest of the industry.
Most people who have never obtained a mortgage before think that it is a simple matter to knock on their banks’s door and ask for the mortgage of their choice. They have after all been faithfully banking at the same bank all of their working career, and have always assumed that they would be rewarded by the bank when the time came to get a mortgage.
However the reality can be far from this for mortgage brokers Gisborne, as the banks in 2017 a very tight criteria regarding who they will lend to and how much. For example the potential client needs to have a very good savings history and a very good employment history, they need to have proof of taxable income that is at least 25% of the total loan they want to raise, and they need to have a 20% deposit in free cash. Some first time buyers may qualify for a special loan that only require a 10% deposit, but they’re gross income will be limited to $130,000.
What many first time buyers find is that the bank does not come to the party and is not remotely friendly when it comes to helping out the client, and it is at this stage that many people turn to Mortgage Brokers for assistance. Mortgage brokers Manawatu are expert in providing financial advice, and in 2017 all need to be fully qualified and registered, the truth is that mortgage brokers in many occasions able to find a solution for the client where the bank could not or would not.
Brokers have access to a range of funders, including obviously that major Banks but also 2nd- and 3rd-tier lenders, plus the brokers know a lot of tricks of the trade in terms of how to best present the client to the bank and how to make the numbers look good. First home buyers approaching a mortgage broker can often be amazed by the quality of advice and service they received, and as far as those concerned they are not paying a cent for it. This of course is not really the case, as while the broker is getting paid a commission from the bank, and the commission can often be very large, the bank will be piling this cost on to the client in terms of interest payments etc. Nothing is really free in 2017
Mortgage broking in New Zealand can be a very lucrative career choice for those people who are smart operators and work hard. The mortgage broker earns virtually all of their income by receiving commissions from the banks once a mortgage has been formalised, and in New Zealand the commission is generally around 0.65%. This means that for every million dollars of mortgages that a broker arrangements they will get paid around $6500.
In New Zealand the average house price is around $600,000, and assuming an average 20% deposit this translates to an average mortgage without $480,000, and an average commission of $3120. A broker would need to write only two average mortgages per month to earn around $75,000 per annum. Ironically for mortgage brokers in Northland the actual hours required to arrange mortgage are generally very light, and a well organised broker with good systems might spend no more than 3 to 5 hours in total in dealing with the client, arranging the paperwork and dealing with the bank.
Even at 5 hours work the effective hourly rate for the broker the $604, which is the sort of pay rate that only the most highly qualified legal or medical specialists can expect to receive. The problem for the mortgage brokers in Taranaki is that they need a steady stream of new clients in order to maximise the use of their time, and in fact most of the time is spent simply looking for new clients and new business.
Many brokers join one of the large franchises operating in New Zealand, and although they need to pay a significant proportion of their commission to the franchise owner they also received a lot more new clients and can earn a very significant income. For example a broker in a large city working for a major franchise owner was averaging over $200,000 per year income for the past 5 or 6 years.
The problem for these brokers is that the franchise owner generally lock them into a very tight contract that prevents them from doing any mortgage broking work for 2 years if they happen to leave the franchise. If they believe that they can actually do better on their own they are legally bound not to take the step.
Small independent brokers on the other hand have no such limitations, but unless they have ready access two referrals and repeat business they will be spending most of their time marketing themselves and searching for new clients. On average they only need to write two average mortgages per month to maintain a $75,000 annual income, and this might represent a total of 10 hours work for the clients.
Naturally these independent brokers would be very interested in a source of new clients, and if they were prepared to do a 40 hour week they could theoretically handle probably 8 clients per week.
Home buyers who are self employed can find the banks unhelpful when raising a mortgage when they want to buy a new home or upgrade their existing home. A couple may have worked with one of the main banks for 20 years and have given them all of their mortgage lending and insurance business, but if they are self employed and want a mortgage for a new home then for the bank they will just be too hard.
There is a very big demand for new homes in New Zealand, and Banks find it much easier to work with homeowners who have Rock Solid employment, good income, good savings and a good clean banking record. Banks are generally unwilling to go that extra mile for those customers who have even a slightly different situation.
A self employed couple for example could be living in a small town in New Zealand and earning what would be for anybody in New Zealand a very healthy income, and they could even own an older freehold property and have access to a useful deposit, but the bank may see this as just a bit too difficult and not worth putting any time into. The problem in small town New Zealand is that there will be comparatively very few mortgage being written in comparison to their big city counterparts, and therefore it is unlikely that the local mortgage brokers Southland will have the essential tools in their tool kits to solve difficult problems like this.
In this situation the best solution for the customer has to go to a big city mortgage broker, who would have the necessary qualifications and experience and will have operated right across New Zealand in Urban and Rural situations. While the broker and the customer maybe a long distance apart, in today’s high speed Internet environment this is of little consequence, as they can have their conversations over Skype video while the customer and broker are finding out about each other.
The customer in the small town cannot be expected to know or trust any large city mortgage brokers, but they may trust an intermediary to find a good broker for them. There is a commercial opportunity in New Zealand for an online service that provides a broking service for mortgage brokers in Otago, particularly where the customer requirements different from the norm and require a more creative solution. Big city brokers tend to understand what the banks are looking for and what they won’t miss if they don’t see it, and so they can help the customer to more creative and perhaps take certain steps to make themselves more presentable to the bank or non-bank lender.
Occasionally a homeowner will need to have a new driveway built, typically after many years of frustration with their otherwise muddy driveway, or after they have just purchased an older house. In the former case the homeowner will have had to either save up for the new driveway all borrow off the bank, probably by adding to their existing mortgage. In the latter case the homeowner will have made certain that the mortgage they got for the new property also covered the cost of the new driveway.
For the bank they will be comfortable that a new driveway will add a lot to the value of an existing property, and generally the rule of thumb in New Zealand is that the value added will be at least four times the cost of the driveway.
The homeowner has a number of options for the surface of the new driveway, including concrete, tarseal, pavers or even just metal. While tarseal is often used for new homes and sloping driveways because it has good grip and looks pretty cool, concrete is mostly what it is chosen for an existing older home. If the homeowner has the energy and the friends who can help then they can try laying a driveway themselves or at try least preparing the driveway base, but in most cases the homeowner will ask for tenders or quotes for this work.
Assuming they get at least three different quotes they should then check with somebody like the city council to see if there is a preferred contractor that the council can verify is providing a very good job, all they should ask the contractors to provide references for the best concrete contractor Wellington has ever seen. Once they have signed a contract then the work can start immediately, and good contractors will be very efficient.
Typically the homeowner will want to replace a Muddy driveway and provide additional off Street parking, and so the work may involve digging up an existing old driveway which could include old concrete, and potentially removing an existing tree and shrubs. The contractor will have a quality mechanical digger and a skilled operator, and so they will be able to operate very quickly to prepare the base and lay out the formwork for the new driveway.
Once the driveway boxing has been laid out the contractor will lay a bed of chip metal, and then will lay out the steel reinforcing mesh. The final concrete pour will generally be done in one lot, working from the back of the driveway, and as the concrete is being poured up the driveway towards the road the contractor will be leveling off the concrete and finishing it off with their machine powered float.
Generally the concrete will take 3 to 5 days to cure sufficiently to carry the weight of a vehicle, and if the pour was done in very hot weather then it should be kept damp during the curing process. However this is not necessary if it was poured in cold and damp weather.
One highly skilled trade that is ignored until they are needed is the humble plasterer. His job, and it is generally a man’s job because of the strength required, is to plaster over the walls and ceilings to provide a professional and long life finish.
Most people take this work for granted until they get to try it out for themselves then discovered just how difficult it is to get a fully smooth and unblemished finish to the wall or the ceiling. The plasterer needs to have a lot of different skills when doing the work, and this includes mixing the plaster just right for the current weather conditions and temperature and humidity, and then applying the plaster in the correct way at the correct timing with the correct number of coats to get the required perfect finish.
The plasterer needs to have a very good eye so that they can no instinctively when there is a blemish or flight dip or rise in the wall or ceiling. They use relatively expensive plastering trowels that are very true and accurate, and they need to work within a quote timeframe to ensure that the plaster is not setting before they have had time to finish it properly.
Plastering is a physical job and requires quite a lot of strength and stamina, and this is particularly so when the plaster is working on a ceiling. The modern plasterer will probably be wearing specialise stilts so that they are working around their head-height under the ceiling, and if the ceiling is particularly High in the stilts maybe as long as 1 or 1.5 metres. This can appear dangerous to the casual Observer, but the stilts are attached firmly to the plasterers lower limbs and feet, and they provide a stable platform for the plasterer to walk around on. They are an expensive specialised tool.
The plasterer’s finished work should have no blemishes and should be invisible under a good coat of paint. This type of finish is not easy to achieve, and generally takes a few years to perfect as a skill. Good plasterers are paid well as they can work very quickly and leave a very good finish on the walls and ceilings.