HOW TO PACKAGE YOUR FIRST ALT DOC LOAN
If you’re new to mortgage broking or haven’t dealt with lenders outside the mainstream before, here’s a few actionable tips to start writing alt doc applications with Bluestone.
Doing something for the first time can be scary, but only sticking to what’s familiar means you can lose out on valuable experiences and opportunities. We recently wrote about the ways diversification can help strengthen broker businesses. But if you’re a broker who wants to take his first steps towards a more diversified offering, you may be wondering where to start.
If you don’t usually work with self-employed customers, they can pose a fantastic opportunity for diversification that doesn’t have to be any harder than the everyday vanilla deals. To help you take those first steps to a more robust business model, here’s a few tips to get you through that first alt doc application.
FULLY UNDERSTAND YOUR CUSTOMERS’ SITUATION
Regardless of the kind of loan your customers are seeking, it always pays to take the time to really understand their needs. This is especially true for loans that fall outside the norms of vanilla lending.
For self-employed borrowers, some of the questions you should ask include:
– How long have they been in business and are they registered for GST?
– Have they completed their most recent tax returns?
– Do they have an accountant?
– Are they looking for specific loan features, such as cash out, redraw facilities or a line of credit?
– Do they have outstanding personal, business or ATO debt they wish to consolidate with their loan?
– Do they have any credit impairments in their history?
By asking these questions early, you’ll be able to get a full picture of your customers needs and ambitions. Armed with this insight, you can go about finding the best loan product for their needs.
GET THE RIGHT DOCS FOR THE RIGHT PRODUCTS
If you’ve never dealt with alt doc loans before, it’s important to know that different lenders ask for different types of alternative documentation to verify the customer’s income. Even the same lender can require different documents for different loans. So if you’re just dipping your toe in the alt doc market, your first priority is exploring the different solutions available and their specific requirements.
Unsurprisingly, the more supporting documentation you provide, the better your chances to access lowest available rates for alt doc loans. These are generally reserved for established businesses that haven’t yet submitted their tax returns, but have ample proof of income in other forms, such as Business Activity Statements (BAS).
For business owners who aren’t quite as established, or don’t have access to BAS, a letter from their accountant could confirm self-reported income. Business bank statements can also help establish income levels if no other form of proof is accessible.
If you’d like to know more about Bluestone’s specific requirements for each full and alt doc product, we’ve created a handy product requirement cheat sheet that can help you select a product and package your application.
If you’d like to learn more about how Bluestone differentiates between full, alt and low doc applications, you may find this recent article helpful.
TELL THE FULL STORY
Once you’ve gathered all the required documents for your customers’ loan of choice, it’s time to package the application. Our loan application checklist can help you make sure you’ve got everything you need.
In your application, you should give us all the information we need to get a full picture of your customers’ needs and circumstances. That way you can help our underwriters assessing the deal avoid delays and achieve a fast turnaround for you.
If you see anything in your borrowers’ records that is unusual – such as large one-off transactions, debits for debts that weren’t listed as part of the borrower’s liabilities, or unusual account activity like large gambling charges – it’s a good idea to enclose a brief explanation so our underwriters have context when making a decision.
MAKE GOOD USE OF YOUR BDM
If entering the alt doc space still seems a bit daunting, remember that you’re not alone. Your BDM is only a phone call away, and they’re subject matter experts who love workshopping deals and helping new brokers learn the ropes.
You can ask your BDM for support throughout the whole process – they advise you on our products, help package the application, and answer questions for the credit team. They’ll be there for you all the way until you can celebrate settlement with your customers. You can find the contact details for our BDMs here.
Trying something new can be daunting, especially in the context of a service you provide for your customers. But there is no reason alt doc loans need to be any more complicated than any other form of loan application, and there’s a heap of help and resources available to support you. Don’t shy away from this growing market and get in touch with your BDM today to get started.