Broker says the tightening of credit policy has been a challenge over the last few years
Jonathan Preston made the switch from financial planning to mortgage broking about five years ago and never looked back. MPA spoke with the 2018 Young Gun about what led him into the profession as well as some of his most memorable lending scenarios so far.
Making the switch to broking
Coming from a financial markets and investment background, Preston thought a career in financial planning was the perfect choice – until he noticed a recurrent theme within his client base.
“In financial planning, I found the demand from my clients was all around property investment.”
By that point, he had acquired properties of his own, and found himself talking to everyone, every day about property.
“That doesn’t fit in very well with the way that financial planning works.”
He decided to migrate to mortgage broking in 2016, joining the AMA winning Home Loan Experts, headed by Otto Dargan.
In 2018, Preston was named MPA Young Gun after writing more than $47m in the year to selection.
Thinking outside the box
The tightening of credit policy has proved the biggest challenge for Preston in his five years on the job.
“The lending space is getting consistently more difficult.”
“What we’re finding is that it’s getting harder and harder to do complex transactions and that the banks have less and less appetite.”
“It’s the really sophisticated ones I’ve seen the market turn against over the last couple of years.”
To overcome this challenge and help his high net worth, more complex investor clients with finance, Preston says it has been essential to think outside the box.
“We’ve tried to be on the frontline of what can be done at all times.”
“We’re building stronger relationships with non-bank lenders, we’re building stronger relationships with the private banking department and doing some of the residential stuff through commercial style lending.”
“Sometimes we’re having to use multiple lenders at the same time to achieve transactions.”
“Whereas a couple of years ago, the banks may have been more commercially minded, we’re finding now it’s a matter of ticking lots of boxes – and the amount of boxes seems to be ever increasing.”
Two complex client scenarios
For Preston, two scenarios stand out as the most memorable in his time as a broker.
The first was the purchase of three commercial properties in the inner-west of Sydney that went up so much in value during a delayed settlement that the clients didn’t need to put a deposit in.
“We did it at 100 LVR purchase on nearly $2.5m based on the value going up so much.”
“The lenders used the equity that had been generated between when they signed it and when they finally settled.”
“That was about two and a half years ago.”
The second scenario involved a client that upped his child support just to get their loan over the line.
The clients were applying for a 90 LVR residential low doc loan with a gifted deposit. Both clients had defaults and it took about nine months to get it approved.
One of the applicants was self-employed with a profitable business but had been declaring a low income based on the deductions he was claiming.
“It was so extreme to the point that the male had declared more on his low doc than what he had declared to Centrelink for child support.”
“He actually had to go to Centrelink and declare a higher income and increase his child support just so that we could get the loan through.”
“It took nine months to get the approval but we settled it and they’re still my clients.”
