Given my generation, X with a little bit of millennial in there being born in 1979, I love to pull themes from pop culture. If you haven’t seen Little Britain, computer says no skit, I would suggest you go and have a look on you tube, its hilarious, and classic British humour.
The reason I am using this is that often I get this answer when speaking to new clients, they have decided to approach their bank direct and they get an answer along these lines, you are outside credit policy which may as well be “computer says no”. How helpful is this to someone who isn’t in the industry? I see it all the time, I wonder whether the staff members default setting is I can get through my work faster if I just say no, then explain if they question me more. Rather than doing the right thing of explaining why it doesn’t work and perhaps asking a few questions to see if there are options.
This is our bread and butter at Loan Market Capital and Coast, we actually want you to achieve your goals and are prepared to work with you to understand how we can get it to work. I would say in 95% of cases we can get it to work post a bank decline. Each bank has its own credit policy and take on risk, here are 2 examples.
- Professional investor, $1.5m in debt and $750k cash, loan to value ratio sub 30%, strong cash surplus and wanting to do new builds and transition to his sons and give them the skills to manage an extensive portfolio in the future. Current bank loads up his home loan interest rates because its investment lending, no more funding as he should be retiring debt as he is over 60 year of age.
Refinanced saving $10k per annum of interest, an extra $750k to do new builds and less property provided as security.
- Mrs Investor, wanting to add small 35m2 apartments to her portfolio to add cash flow for later in life, receives child support and works full time. Declined by her bank due to not accepting her child support and won’t accept the apartment at all as security due to its size being below 40m2, using her home only as the security which will restrict her ability to borrow in future
Refinanced to a bank that will accept the child support, will lend up to 50% on the non standard apartments, small saving in interest costs and now providing an extra $10k in passive income per annum from two apartment purchases.
I continue to read articles from the Bank CEO’s talking about Robo advice and end to end automation of the process for bank products. It has some merit as we see the likes of Google, Facebook and other start-ups start to take chunks out of banks business, this will accelerate. Personally, I think this drive is to reduce staff numbers and costs rather than to make it a better and easier experience for their clients. These other institutions have this at their core so will ultimately beat the big banks, they tend not to have institutionalised conservatism at their heart but innovation. All I see currently is the banks making the process more difficult and trying to make human situations fit inside set parameters that in the real world don’t work.
Dehumanising the whole process is not the answer, people trust people, people like dealing with people when they don’t understand, just in case they are missing something. We buy houses every 4-7 years not enough to make it a process we know like the back of our hand.
If you want the local, personalised approach to navigate the “computer says no” mentality then talk to us.