What are the biggest challenges facing your customers?


To survive as a mortgage broker long term, it is critical to position yourself as a solutions provider as opposed to having ‘the best rates in town.’

In order to do this effectively, you need to put yourself in your customers shoes by asking the question, “What are the biggest challenges facing my clients?”

Really take the time to think about what the biggest pain points are for certain scenarios and then, try your best to provide easy to understand solutions to these pain points.

For instance, in my area of Lower North Shore Sydney, as a result of the recent boom we’ve had, a lot of couples in their early 30s who are looking to start a family are stressed that they are never going to be able to own a home. However,  they’re also stressed because even if they do end up owning their own place, how the hell are the going to be able to afford the repayments when they drop down to one income?

Only yesterday I had a meeting with a couple who were faced with this dilemma. Their pain points were:

  1. The purchase price we’re looking for is around $1M to $1.3M. We’ve got $200K, how much will we have left over?
  2. If we drop down to one income, how are we going to afford the repayments?
  3. We don’t want to wait another year because if house prices keep increasing, we’re never going to get our foot in the door?

Having recently had my first child 6 months ago, I am distinctly aware of some of the troubles that face young couples during the first few months (hopefully not years, but I suspect it might be so!) of having a child.

The first thing I did was give them the numbers for a $1.1M purchase for them to think about, which were:

  • $10K left over after all costs.
  • Total loan amount of $992,550
  • P&I repayment of $4,965.27/m

Now if these two weren’t planing on having kids, this scenario would have been fine for them. They were earning combined net income of $15,300/m so the mortgage repayments only represented 32% of their expenses.

However, being able to afford a property right now wasn’t their main pain point, it was how do we get into the property market and what happens when we drop down to one income?

So the next thing I did was use the Client Needs Analysis to discuss their cash flow position. I pointed out that if we only use the husband’s income, their net income will drop to $7,162/m which means that after the home loan repayment comes out (and presuming rates don’t increase) they will only have $2,197/m to fund everything else in their lives.

From there we had an honest conversation. I asked them, “Guys when everything is said and done, if your income drops down to $7,162/m when you have this child, what do you think the max mortgage repayment needs to be for you not be too stressed?” The husband answered, “I think it’s what we’re paying now in rent – $3,500/m.”

I said, “Ok, well, based on P&I repayments with a rate of 5% that’s going to be a loan of about $650,000 which will mean that at a purchase price of $1.1M, you’d need to have $505,000 available and that doesn’t leave you with anything left over. What do you think the chances of you saving the rest of that money in the next 5 years are?”

They begrudgingly answered, “Next to nothing!”

Turning a negative into a positive

Unfortunately for this couple, their first pain point was answered – they can’t afford a home between $1M to $1.3M if they want to have a family.

However, there was a workaround to their second pain point – how can we get our foot into the property market?

The answer of course was to purchase an investment property as opposed to a family home and continue renting.

I told them that if they are going to start a family, for the first year they are going to have to have at least $50,000 in savings in order to cope with any expenses that will undoubtedly arise from having a child. That leaves $150,000 available.

From there I educated them about the investment properties (for Broker Elite Online Coaching clients, make sure you watch my session on how to sell investment properties in module 3), in addition to showing them that at a $700,000 purchase price, they’d have $50,000 left over and holding costs would be under $500/m.

Finally, I showed them what the implications would be if they wanted to sell in 5 years by modelling a few worst, likely and best case scenarios so they could be comfortable with their decision.

In summary, the value add of a mortgage broker is so much more then simply offering cheap rates. Your job is to always try and put yourself in your clients shoes to know what their pain points are. If you can do that, you will quickly become their trusted adviser as opposed to just some transactional mortgage person.

Committed to your success,

Tim Russell