Broker Q&A: Christopher Foster-Ramsay, Capital Homeloans

When we restructured into Capital Homeloans it was part of that plan, so probably November 2013.

What was the turning point that led to this decision?

We were offered an opportunity to look after what is now one of our major accounts’ residential and commercial lending, so it was something we fell into but it was a welcome surprise.

What was the first thing you did once you decided that you wanted to write commercial loans?

We lent upon our really great residential BDM relationships to find out the logistics and the ‘how to’, and whether a particular lender has an appetite for commercial lending. Then it was just a matter of building the relationships up and working with the clients because they knew we’d done a little bit but hadn't really played in that space a lot.

Did your aggregator play a role in getting you started?

In our case it wasn’t really applicable because having worked for Connective for three-and-a-half years prior to this change, I sort of knew what was already happening, so I didn’t really need to lean on them. But my advice to others not in that position that are looking at diversification into commercial is there are some really great BDMs in the market and a lot of those will have residential and/or commercial lending [experience]. The industry is so small, so intertwined, that there’s always bound to be, at an aggregation level, someone that can hold your hand or point you in the right direction when you want to diversify into commercial lending.

Did any challenges arise when you first started writing commercial loans?

Not that I can remember. The way I positioned myself in writing commercial at the start was to work with others that had been there and really take their advice on board around how to structure something and what all the different terms meant. I had a bit of an idea about what was going on from my experience but by no means was an accomplished commercial banker, so it was important to really understand what advice I was getting, particularly from the bank BDM. Certainly they made it much easier by helping me to understand and explain the key concepts and what the information required was.

On that note, just how important is education/upskilling when it comes to commercial lending?

It’s imperative. In my view there are three types of commercial brokers. There are commercial brokers that have done commercial forever and a day and just know it. There are people like me that want to do it, have always wanted to do it but have really had to invest in the upskilling and understanding of the client. And then there is the other bucket, which unfortunately is probably more prevalent in the resi broker space where they happen to stumble upon a commercial deal and don’t really know what to do with it, so they just refer it out to the commercial business banker and they might only do one or two commercial deals ever. In our case it’s different – we’ve actually set up a commercial business unit within our business. That’s been a clear distinction to someone who might come across a commercial deal now and again.

What are the benefits of your business having a commercial arm like this?

Not being hamstrung. We’ve done the same with plant and equipment as well as personal lending, and what it means essentially is that our business is structured in a way where our residential arm and the upfront trails that brings keeps the business going and the commercial arm allows us to fast-track investment and growth in the business. For example, last year we grew on average at about 200 per cent year-on-year, spiking to about 400 per cent year-on-year. That’s allowed us to bring forward a whole lot of investment and growth in the business and we’re now up to, staff-wise, triple what we had this time last year. Significant investment has allowed us to fast-track that growth and certainly gain market share of our target market.

Lastly, what are the top tips you have for brokers looking to start writing commercial loans?

One would be make sure you do the research and that you understand and ask about the concepts enough to be able to deliver to the client what they like and what they want. The client is going to know if you’re a new starter equally as much, if not more, than you as a broker do, which means you can’t wing it – you need to have a solid understanding.

Second would be to utilise relationships within your banking and aggregator groups to be able to upskill in that area. If you get the opportunity, don’t refer it out – run with it and try and make it work the best you can. They’re probably my top tips, and I think if you get to a point where you can invest heavily in creating your own business like what we have, getting the right people who have experience in the field is absolutely integral to the business’s success.