Using a bond originator when applying for housing finance is widely accepted as a good idea. The sheer convenience of having a professional handle the nitty-gritty of the application process is usually enough to convince most buyers. While convenience may be the most obvious advantage, however, Leonard Kondowe, National Admin Hub Manager for Rawson Finance, says it’s only the tip of the iceberg when it comes to a bond originator’s real value.
“The convenience factor is certainly one of the most common arguments for using a bond originator,” says Kondowe, “and part of our mandate as members of the Rawson Property Group is to make the purchase experience as smooth and stress-free as possible. As important as that is, convenience only goes so far when you’re looking at a financial commitment of 20 or 30 years, though. When you really get down to it, the most important part of a bond application for most buyers is getting the best deal they possibly can.”
This, Kondowe explains, is where originators really excel, and they do it using methods you may never have realised were being put to work in your favour.
Driving competition for your application
According to Kondowe, the first “behind the scenes” benefit of applying for a bond through a bond originator happens the moment that application lands on the bank’s desk.
“If an application is submitted via an originator, the bank immediately knows that every other reputable financial institution is also seeing that application,” he explains. “They know that if they don’t put their best offer on the table, they could easily lose out to a more competitive institution.”
If, on the other hand, an application is submitted by an individual, Kondowe says there is typically less pressure for banks to be as forthcoming.
“Very few individuals have the time or energy to apply to every single bank – they tend to just pick a few that they think are the most likely contenders,” he says. “Banks know this, so they don’t worry about being as competitive, and the offers they present are often higher as a result.”
Polishing your image
It’s not only passive benefits that bolster your application. Kondowe says originators are also highly skilled at presenting your financial history and current circumstances in the best possible light for each institution.
“As originators, we build relationships with banks and learn a bit about what they like and what they look for in applicants,” he says. “That enables us to tailor applications to appeal to each bank in the best possible way.”
More than that, Kondowe says originators also advocate on behalf of their clients to ease concerns banks may have about the client’s past, present, or future prospects.
“We can’t lie or misrepresent things,” he says, “but we can explain your situation and argue on your behalf. That can be difficult to do as an individual since it’s often tough to get face-time with a bank representative.”
Driving a hard bargain
By approaching all viable financial institutions and presenting your application in the best possible way, Kondowe says most clients get reasonable offers out the gate when using an originator.
“Good originators don’t settle for ‘reasonable’, though,” he says. “’Reasonable’ is just a jumping off point to negotiate for ‘best’.”
These negotiations are a delicate balancing act that plays on the competitive nature of financial institutions to drive the offered interest rates as low as possible.
“One thing we’re seeing more of lately is that banks are willing to lower their interest rates if it means gaining other business,” says Kondowe.
…but what’s in it for them?
“Origination services are free to our clients because we get commission from the banks,” says Kondowe. “For most of us – at least at Rawson – it’s about much more than just that, though.
“The reward for us is in helping buyers through what can feel like a daunting process, helping sellers feel confident that their sale is secure, and building relationships with people setting out on a property journey. As part of that, we do a huge amount of business that doesn’t generate any commission at all, but is vital to making the Rawson Property Group a real estate partner in every sense of the word.”