How advisers can add value
Two mortgage advisers that have worked with New Zealand mortgage group Vega have shared their case studies about how they helped their self-employed clients get on the first wrung of the property ladder.
Taken together, the case studies show the value mortgage advisers can bring to self-employed clients who may fall outside the traditional lending requirements of the direct channel.
It comes at a time where SMEs are increasingly looking for advisers to add value as they shift strategies amid a turbulent market.
Getting home loan approval despite recent business changes
The first clients, a young family who were first-home buyers, recently transitioned their business type within the same industry.
They had also tapped into their savings to invest heavily in equipment upgrades.
The challenge arose when then their previous net profit was significantly lower than the projected result, and the current financial year hadn’t been completed yet to demonstrate any improvements.
This raised concerns about meeting the lender’s affordability criteria, according to Vega.
The solution came through Natalie Hughes (pictured above left), a financial adviser – mortgages in Waikato.
Leveraging an accounting background, Hughes analysed the clients’ financial statements.
They showcased the improvement from their past business activity to the new one, highlighting improvement in profitability in their mortgage application to mitigate concerns about income stability.
Careful selection of lenders and in-depth knowledge of their policy requirements, coupled with strategic use of business expense add-backs, made it easier for the clients to secure their loan approval.
Hughes said: “Here’s to turning homeownership dreams into reality for families, one mortgage approval at a time.”
From wages to business owner and successfully securing a loan
Like many young Kiwis in the current market, the first-home buyer couple started their journey with a 20% deposit.
One of the pair was working for wages as a masseuse and wanted to start her own business, while her partner was on PAYE basis.
The solution came in the form of financial projections.
The mortgage adviser Deon Johnston (pictured above right), a former Vega adviser who is currently self-employed for Mortgage Advice For You, worked with the client to project earnings weekly taking into account appointment capacity, rest breaks, and market demand among other factors.
These calculations provided a solid foundation for forecasting future revenues, with the calculations to back up the earnings, showing the client still had extra capacity and was not stretching her beyond her means.
The next step was strategic planning.
Based on the earnings projections, the adviser developed a game plan with target earnings over the next seven-month period with regular check-ins which proved the forecast was achievable.
Finally, Johnston had to secure funding.
After seven months, armed with a well-documented business plan, detailed financial forecasts, and evidence of actual earnings, the client successfully secured lending to purchase their first home.
Johnston said, “We are more than just mortgages – we will go the extra mile to help customers achieve their dreams of homeownership.”
