Upon receiving a loan application, either from a borrower or referral source, you should assess the application by performing searches, requisitioning additional information and making telephone calls.

Your focus should be on:

  1. The scenario, with particular emphasis on its veracity and the viability of the proposed exit strategy, and

  2. the value of the security offered.

It is this preliminary due diligence that separates a good broker from a bad one. It prevents aggravation to all parties, especially the lender, at a later stage. By challenging and investigating the borrower’s story, you will identify good loans from bad. You will preserve and enhance your reputation and relationship with the lender.

Remember a lender’s capital is the gift that keeps giving. Treat it well and it is yours to earn money off year after year until you retire. If you are slack in any way the investor will shun you and you will never do another deal with that investor.

Private mortgage broking requires discipline because there is no aggregator or bank prescribing what enquiries you need to make. Instead it is a matter for your good judgment. If you are lazy and leave stones unturned you will sour your relationship with both the investor and Bransgroves Lawyers.

The scenario

You should investigate the borrower and guarantor and their directors and shareholders (and if previously unknown to you the referrer) performing:

  1. Bankruptcy searches;

  2. Company searches;

  3. Director searches;

  4. Google searches;

  5. Austlii searches

The purpose is to find any fraud or red flags. For example the borrower may have been convicted of a serious crime, they may be deceiving the proposed guarantor, or their stated source of income may be a