Personal lender MoneyPlace suggested brokers start offering personal loans, waiving set-up fees until the end of November and announcing a new overall unsecured rate of just 5.95%.
This changes dramatically from what the industry was half a decade ago, where personal loans were regularly offered at 15% and mortgage brokers found them very difficult to manage.
Alf Vasta, Broker Distribution Manager at MoneyPlace, has more experience than most in the areas of personal loans: he was BDM at Liberty Financial and worked in this area in the UK and Australia before launching the offer of MoneyPlace brokers.
âI set up the broker channel at MoneyPlace two and a half years ago, so I could give some context,â he told Australian Broker. âIf you look at what I said at the time, and what interested me about moving, is that personal loans have evolved.
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âRather than just using them transactionally, brokers can use them as part of an overall solution. This is where education comes in. If you have a broker who takes out a home loan, there are ways to use a personal loan: pre-mortgage, medium-mortgage, or post-mortgage.
âBrokers may run into a potential hurdle that does not allow them to submit the request on behalf of the client or they may not be able to meet the exact needs of the client. The client may be looking to buy a property, he needs, say, $ 650,000, but when he is doing the maintenance, he can only get $ 610,000.
âThen it comes down to thinking: How can personal loans fill in the gaps in the business? How can they help you when you are stuck with a deal to provide this solution? Can you use a personal loan as a stopgap? “
âBrokers are starting to understand this. When I joined two years ago – and I said it back then – my goal was not to sell MoneyPlace, but to sell personal loans as a viable option for brokers to use in the market. to help their customers.
For Vasta, the industry has changed rapidly and is now an open door for mortgage brokers to go through to diversify their offering to clients.
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âBrokers are now educated enough to understand that personal loans have evolved from the old days,â he said.
âThe common myths were that personal loans were too expensive: it was true, because in the banks, we were talking about 15%. Today I am talking about a rate of 5.95% for the unsecured. Itâs phenomenal. We have secured from 4.84%. Think back five years and it was in double digits.
âThe other myth was that personal loans were too clunky, you had to fill out a manual application that you would send to the lender, they would have to load it into a system and you would go from there. The banking system was oriented towards the residential sector. But we are a fintech, we focus on technology. It takes five minutes to get a quote and make a deal with us.
âFor brokers, it’s about reconverting their core business: if you take the example of a client short of 50k on a home, think about what this personal loan could help. We do top-up funding and we do it very well.
âThen there is the creation of new market opportunities. By offering personal loans, brokers will have better engagement with their client and create longer-term partnerships. If the client only knows him as a mortgage broker, then when he needs a personal loan for renovations, he won’t go to his mortgage broker for it.
âThey’ll do some research and maybe go to another broker who might specialize in personal loans. By offering personal loans, brokers can maintain and maintain their relationship. At MoneyPlace, if you use us for a personal loan, at any point in that 7-year term, you can exit without penalties.
âIf the broker’s strategy is to use us or consolidate debt to help service, or to avoid LMI, then they might reach the stage where they develop equity and can consolidate our debt. With us, there is no exit penalty. It’s a really flexible product. This is so important when it comes to personal loans and solutions for clients.