MARKET MATTERS / MASTER CLASS things to try and drive business that I realized simply having the knowledge to give a comprehensive answer to a mortgage- or real estate-related question is what people appreciated. That and chocolate. More on that later. The higher the quality data you supply your clients, then not only will it be easier for you to deliver to the next client, it will also be far tougher for any other lender or broker to poke holes in it. For instance do not talk about payment differences between interest rates, but rather calculate the specific interest expense difference. It is a different dollar figure and more meaningful to all clients once set out for them.
Product Open Prime +.50 Open Prime +1 Closed Variable P-.20
Balance $100K $100K $100K
GIVE REAL-LIFE EXAMPLES I often use this precise approach to break down ‘interest-only’ mortgages and closed variables: Clients are attracted to lines due to the low monthly payment. However, once you show them the actual interest cost of a line at Prime +0.50 per cent as compared to a closed variable at Prime -0.20, things change. Then we look at the true cost of the penalty to break a closed vs. the true expense of sitting in an open ‘penalty-free’ product.
Monthly Payment $289.56 $330.59 $410.03 (30yr)
Interest Component $289.56 $330.59 $231.00
Penalty to break Zero** Zero** $693.00
**Often an open mortgage will include a $500 penalty for early payout, although this varies from lender to lender and obviously makes a huge difference.
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