October 2012

Brighter Outlook for Brokers

The Global Financial Crisis (GFC) hit with hurricane force, hurtling the Australian commercial property market to the canvas, and consequently lenders pulled out of the sector in droves. Three years on from when the Australian economy experienced its first quarter of negative growth for eight years, the commercial property sector may at last be ready to pick itself up off the floor. The National Australia Bank Quarterly Australian Commercial Property Survey: June 2012 discloses that whilst it is not officially on the road to recovery, we may have seen the worst; and in fact, may be about to see a slight increase in the Commercial Property Index beginning Q3-2012, possibly returning a positive index result by March 2013. The projected increases in the Commercial Property Index, though by no means steep, are expected to rise steadily through to Q2-2014.

This news is welcomed by those in the commercial property area and real estate agents alike, but why aren’t mortgage brokers more excited by this turnaround of events? Executive Joint Head of Asset Origination, Stephen Lawrence explains:

The very words commercial lending is often enough to send a shiver up a broker’s spine as it is often simply too hard and too time consuming to attempt a commercial loan submission. First, you need to navigate your way through the various complex lending policies to find a suitable lender for your client, then compile the staggering list of documents required, complete a technical serviceability assessment often using complex financial ratios, satisfy outstanding conditions running from A to Z, and finally, cross your fingers that the valuation stacks up.

Pleasingly, the future of Commercial Lending is looking much brighter for brokers; relief is on the way thanks to the few non-bank lenders still active in the commercial lending arena. The nonbanks have a service first mentality which has resulted in a more streamlined and efficient process for brokers to use, often mirroring the process for their own residential loan products. Mr Lawrence explains how La Trobe Financial has made its commercial products ‘broker friendly’:

Putting ourselves in the borrower’s shoes has helped us craft our commercial loan products into market leading solutions, catering for borrowers seeking commercial finance without all the unnecessary fuss and paperwork. We are able to implement our standard residential loan assessment criteria, policies and procedures to our commercial loans, so that any broker familiar with our residential products can easily begin writing commercial business with us.

In relation to brokers not familiar with commercial lending, Mr Lawrence continues:

Our products are suited to brokers who have never written a commercial loan before, and are a great way for brokers to increase their revenue stream.

By adding commercial lending to your repertoire, brokers are able to service more customers by volume, and unlock a new – potentially lucrative, demographic of client as commercial property is often part of a sophisticated investor’s property portfolio.

Diversification is the catch-cry of the mortgage industry at present, with many doomsayers predicting that unless mortgage brokers have an arsenal of finance products at their disposal, a bleak future beckons. Commercial lending with a non-bank lender is a great way for brokers to expand their product offering without the need for extensive training or capital investment, and with attractive upfront commission and trail payments on offer for what are usually high dollar loans, the answer is simple.

The second coming of commercial lending is timely for all concerned, and something all brokers both residential and commercial can look to embrace today.

Commercial Deals of the week

Below you will find two case studies detailing commercial loans we have settled recently, which provided satisfactory outcomes for the customer. Maybe you are looking to place something similar now

Case Study 1 - Purchase Industrial Factory

The applicant is a sole trader working for the past 10 years running his own panel beating business in Bargo, NSW. The applicant is experiencing growth in his business and is looking at expanding by purchasing a larger Industrial property out of which the applicant will run his business. The applicant was previously paying $32,000 per annum in rent. The new repayments are $26,000 per annum. The customer is now able to own the premises they operate from and have reduced the monthly outgoings for the business. Based on the above we were able to assist the applicant.

Result: Loan approved under our Commercial Express Product

Purchase Industrial Factory in Bargo NSW – Lite Doc
LVR 60%
Purpose Purchase
Interest Rate 8.70% Variable
Credit impairment Clear
Loan Amount $290,000
Term 3 years - Interest Only
Application fee 1.25% with no LMI or Risk Fee
Serviceability Lite doc (Accountants Letter and Self Declaration)
Broker commission Upfront - $1,450 (0.50%) with no claw back risk
Ongoing trail - 0.25% p.a. paid monthly

Case Study 2 - Cash Out for investment purposes

The applicant has been employed for the past 3 years as an operations manager. We were requested to assist the borrower with cash out for Investment in shares and property for tax purposes/gearing with Accountants advice. The security property was an unencumbered retail shop located in Canterbury, which is a well known suburb east of the Melbourne CBD and currently tenanted as a pizza business for $28,000 per annum.

We were able to utilise the equity they had built up in their commercial investment property and also further expand their investment portfolio.

Result: Loan approved under our Commercial Equity Express Product.

Commercial Equity Express – Lite Doc
LVR 70%
Purpose Equity (cash out)
Interest Rate 8.90% Variable
Credit impairment Clear
Loan Amount $492,000
Term 2 years - Interest Only
Application fee 1.25% with no LMI or Risk Fee
Serviceability Lite doc (Accountants Letter and Self Declaration)
Broker commission Upfront - $2,460 (0.50%) with no claw back risk
Ongoing trail - 0.25% p.a. paid monthly

We believe that we are a serious alternative to the banks and if you have any similar scenarios on your desk that you are having difficulty placing give us a call.

The case studies above were just two examples of the many instances we have helped brokers place their loans recently. We have plenty of other flexible products available for a wide variety of purposes, so do what hundreds of Brokers do and contact your dedicated La Trobe Financial BDM, or call our experienced credit team direct now on 1800 707 707 to see if we can help.

Product Guide Last Origination News Application Form

If you haven't yet downloaded a copy of our new look Product Guide detailing our full product range, or didn't get a chance to read last month's Origination News, download them now by clicking on the images above.

Best regards

Steve Lawrence

Your "lender of first choice"


> Home
> About Us
> Login - Product Guide
> Loan Applications
> Loan Products
> Partner Portal
> Privacy Charter

Steve Lawrence
Joint Head of
Asset Origination

t  +61 3 8610 2807
e  slawrence@latrobefinancial.com.au

Cory Bannister
Joint Head of Asset Origination
0403 361 026
Craig Robertson
Joint Head of Asset Origination
0447 599 664
Daryl Hill
National Relationship Manager
0408 566 524
Justin Coates
0407 526 238
Joint Head of Asset Origination
0408 566 518
Eren Myers
0409 419 039
National Relationship Manager
0421 029 691
0409 435 559
Andrew Mercer
03 5177 1652
Darlene Musgrove
03 5177 1670
Luke Jones
03 8610 2816
Linda Gorski
Asset Retention Manager
03 8610 2817
Phil Wilson
Asset Retention
03 5177 1656
Katie Paulet
Credit Analyst
03 5177 1718
Jimmy Mc Grath
Credit Analyst
03 5177 1660
Louise Lindeman
Credit Analyst
03 8610 2827
Melissa Greenwood
Credit Analyst
03 5177 1798

La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 145 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.

Copyright 2012 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial. Disclaimer

Please Note: This publication is for accredited broker use only and is not for distribution to consumers.

^All loan applications are fully assessed to ensure the loan is not unsuitable and that we meet our responsible lending obligations in accordance with our usual underwriting requirements. All features and interest rates are current as at the date of publication. Conditions, fees and charges apply. This message, together with the La Trobe Financial website (www.latrobefinancial.com.au) and all its contents have been prepared for general information only and should not be taken as legal or financial advice, and as such the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before acting on any information present on this message or the La Trobe website. La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Mortgage Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. You can get a copy of the PDS by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you. The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund, and may achieve lower than expected returns. Investors risk losing some or all of their principal investment.

La Trobe Financial Services Pty Limited - Australian Credit Licence Number: 392385
La Trobe Financial Asset Management Limited - Australian Credit Licence Number: 222213