Malcolm Lobban (CA)SA

Accessing the lucrative mortgage broking industry

The SA Mortgage Origination Industry

has grown exponentially since 1999 due to:

– unbeatable consumer value proposition

– no cost to customer

– better interest rate concessions

– growing residential property market

– low interest rate environment

– rapid adoption by banks as distribution channel (>80%)

– R50b/80 000 applications a month industry

– world class technology

– greater productivity and efficiencies

– vastly improved service levels

• new home loans• further home loans• debt consolidation• re-pricing• switching

• single point of contact for all bank products• expertise to advice• best home loan deal - product - price - interest rate categories• free service to clients• fastest answers/turnaround times• agent of the client, not the lender

• product providers• loan administrators

CLIENTS MORTGAGE BROKERS BANKS / LENDERS

Mortgage Origination Value Chain in Pictures

Mortgage origination: value proposition

• single point of contact for all bank products• comparative analysis• best home loan deal

– price– products– interest rate type

• expertise and advice• fastest answers / turnaround times• free service to clients

The role of the mortgage broker

• Intermediary : represent the client• Facilitate mortgage finance needs for clients• Contracted distributors of mortgage products• Not mortgage lenders

Mortgage lender

Home buyer

An excellent opportunity for Independent Brokers…

• 70% of independent brokers in the UK are already active mortgage originators

• Independent broker value proposition becoming more & more relevant & important

• Brokers have a forward/dominant position in the value chain (closest to client)

• Accredited proposition in an unregulated industry

An excellent opportunity for Independent Brokers

• Financial planning includes debt management

• Mortgage is biggest debt and key to wealth creation for most South Africans

• Reduce your client’s interest burden and protect existing policies

• Welcome revenue stream to counter impact of life commission changes

• A defensive and aggressive strategy

Our Business

• Financially Planned Mortgages (FPM)

• 3 partners with professional backgrounds– CA(SA) and two lawyers

• Aimed at accredited intermediaries only

• Positioned for a regulated market ( Planning Ahead)

• Selected Mortgage Max as a service provider

Our Value Proposition

• Provide easy access for independent brokers to the mortgage broking industry

• A “pre-point of sale” solution as the differentiator

• Marketing and promotion to client base well before competition

• Protect and enhance the Value of Trusted Client relationships

The Principles

• Simplicity/Ease of entry• Confidentiality and Integrity• Service levels• Information flow• Profitable

Why Mortgage Max?• THE TECHNOLOGY

Exclusive rights in the mortgage broking industry

Makes your life easy-just complete the application and they

do the rest

THE SERVICE HUB

Personalized service to the broker

Daily feedback on each loan

THE PEOPLE

Many years of banking experience

Relationships and leverage with all the banks

• Immediately, NO recapturing or time delays

Why we can claim true differential?

• Exclusive license from the developers of the software – in RSA

• Exclusive link to Bondtrak

• Bondtrak inextricably linked to the Mortgage Switch

IE: direct access to the banks

Specialist mortgage and financial services

Quantifying the Opportunity• An independent broker with 300 clients

should facilitate at least 4 deals per month• This should translate to gross monthly

earnings of R30k Excludes -debt consolidation and switching

opportunities -cross selling opportunities from these 3

deals e.g.. life cover, short term cover etcWhy let a Bank Broker own your relationship.

You own it, Capitalise on it.

OPTION Lead Generation

• Our customized solution for brokers:

-Regular feedback-Pre-qualification tool-Qualified leads-No risk of disintermediation

4 PRODUCTS FOR YOUR CLIENTS

• Debt Consolidation

• Re-pricing

• New property purchases

• Further bonds

THE ‘DEBT CONSOLIDATION’ VALUE PROPOSITION

THE ‘DEBT CONSOLIDATION’ VALUE PROPOSITION

• Reduces overall cost of debt by using cheapest instrument – the mortgage (home loan) because it is secured

• Very significant in a high interest rate / high inflation environment• Client benefits:

– Cashflow-same term with reduced outflow– Time/Simplification– Flexiblity (access to funds) – Facilitates and protects the ongoing

payment of critical commitment• Protects existing policy payments

THE ‘RE-PRICING’ VALUE PROPOSITION

THE ‘RE-PRICING’ VALUE PROPOSITION

• Opportunity to reduce interest rate and / or monthly repayment exists due to improved loan to value (LTV) levels – (LTV is the ratio of the outstanding loan balance to the value of the property)

• Two ways to do this:– Reprice existing loan– Switch to another product (more likely to provide

basis for greater Access Bond type flexibility)• Short term associated costs for medium to long term

sustainable benefit, but no negative impact on short term cash flow

THE ‘NEW PROPERTY’ PURCHASE VALUE PROPOSITION

• Talk to broker first if thinking about purchasing property – (I’m your independent financial advisor, including mortgage finance expertise)

• Will assist in indicative pre-qualification in context of new NCA

• Reduce hassle / frustration

• Find you best home loan products / package

• Even deal with estate agent on your behalf

• Build in ‘sensitivity analysis’ for interest rate changes

THE ‘FURTHER LOAN’ VALUE PROPOSITION

• Equity in property is a ‘sleeping asset’

• Opportunity to build on the existing home loan and relationship with client’s bank in accessing further, least expensive secured finance

• Particularly relevant where client has owned property in excess of 3 years and has had benefit of value appreciation and reduced the capital amount of the loan

• Does not mean longer repayment term : stay with short term loan intention, at cheaper interest rates

BACK UP AND SUPPORT MECHANISMS

• Technology support– Direct access to Comcorp Solutions management and staff– Comcorp call centre

• Client interface support– MortgageMAX Regional Managers and Client Executives– Comcorp Business Engineer’s: origination advice / support

• Broker Administration support (on applications and general advice)– MortgageMAX Support Hub