Mildura Finance's Peter Schroeder tells MPA about making the shift from car and equipment finance into mortgages.
Mildura Finance executive director Peter Schroeder has taken an interesting route into mortgage broking. He started out in car and equipment finance, but found that moving into mortgages was a natural progression. However, being an equipment specialist, he has also teamed up with several aggregators to successfully grow that side of the business. He tells MPA his story.
MPA: Which area of finance did you start out providing?
Peter Schroeder: We started back in 2000, and we predominantly just started doing cars and equipment and then went into mortgages. Over the years we’ve built the business up where we run separate departments for each part of the business. So we have an equipment area, a motor area, a residential area and a commercial area that are all separate and that’s continued to grow.
MPA: What was the next step?
PS: Back in 2004 we did a joint venture with Connective to set up Connective Plant & Equipment, which offers equipment finance to all their mortgage brokers. So we offer car and equipment finance to all of their brokers – we run an online system. And that side of the business grew until about 2008 when we further diversified and we started offering equipment and motor to other aggregators. And now we deal with about six aggregation groups and about 3,500 mortgage brokers nationally.
MPA: Do you find other brokers easy to deal with?
PS: Yes and no. Education’s probably the key that we’ve found over the last few years – we’ve really pushed our education levels with the brokers. And it’s just not saying ‘here’s the product’, it’s teaching them how to sell and how to compete against car dealers and so forth. We push down the motor side more than the equipment side, because motor’s quite easy to do and there are so many opportunities within their database – every one of their clients owns a car, basically.
MPA: Do you provide funding yourself?
PS: No, we have a fairly large lender panel and our brokers go through our online system, which gives them access to about nine lenders, and then they can quote and offer. We deal with Connective, Smartline, Loan Market, LJ Hooker, Finsure and Mortgage Choice presently.
MPA: What tips can you provide to brokers who want to provide motor finance?
PS: The key is education. Either speak with the aggregation group you’re under and do a training session on products available in the market, how to go about providing advice, how to compete against car dealerships and so forth. And that’s generally what we do. We do a two-hour session with our guys, and then a 12-week marketing challenge for them as well. We help them to go through their databases and find opportunities and so forth. Often they’re quite scared of that first deal, but once we help them with the first transaction they say ‘this is pretty easy’. There’s no rocket science about it. The easiest way to do it is to do your own car first.
MPA: How can brokers stay on top of the workload?
PS: Some of the groups that we deal with operate with a PA. They source the transaction and give it to them to process it. And the good ones are generating enough income to pay for that PA – so they end up paying for themselves.
MPA: How much business do you write yourself?
PS: Locally we do about $50m a year in residential and commercial, and $70m a year in cars and equipment. We cross refer from residential into motor and vice versa. Cars and equipment have always been a larger part of the business, but one thing we find about writing cars is that it is a consistent way of generating income. Our motor department generates between $30,000 and $40,000 a month in income. And we get a lot of repeat business.
