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Special Formula for early Mortgage loan liquidation

When Global Financial Services Limited (GFSL) Managing Director Ajay Kumar told a medical practitioner that he can liquidate his mortgage loan in five years instead of the normal period of 25 years, the latter stared at him in disbelief.

And when Mr Kumar told Dr Mohammed (not his real name) that he would also save up to $450,000, the potential client thought that he was meeting a non-professional, who was new to the business.

Mr Kumar was indeed new to the business, but he was not a non-professional. At that time, he had 21 years of experience as a banker, with a postgraduate degree in Science and CAIIB from the Indian Institute of Banking & Finance. He revealed his special formula to an apprehensive Dr Mohammed and assured him that it was not unrealistic.

“You do not know me, my lifestyle, the constant travel and other expenses that I incur and yet how can you be so positive,” Dr Mohammed asked.

Target achieved

Mr Kumar replied,” Trust me. You can repay your mortgage in five years. You can pay my fee after liquidating the mortgage. I am prepared to wait for five years.”

That was in February 2000 and five years later, almost to the date on which the medical practitioner had drawn the loan, the Bank wrote to him confirming that he had repaid the entire amount and that his house was mortgage free.

It was no surprise that a grateful Dr Mohammed recommended many of his patients and friends to GFSL for mortgage loans.

“There are ways and means through which mortgages can be repaid faster, saving people hundreds of thousands of dollars. We have been able to help a majority of our clients to achieve this objective. Many of our clients have been able to obtain loans for purchase of second or third homes and follow the same process of early repayment,” Mr Kumar said.

Special Day

It was only at the end of our interview at his offices (at Unit 19, 203 Kirkbride Road) in Airport Oaks on March 5 that he casually mentioned that it was on this day 15 years ago that he established the Company. The mood of celebration among his staff was instant.

There is something special in the man that enables him to keep his cool at all times, even when while dealing with a challenging situation or a troublesome client who refuses to honour the Agreement signed prior to securing the loan.

“We live in a competitive environment. People are free to visit as many mortgage brokers as they want before taking a final decision. But it is unfair to GFSL, or for that matter any of our competitors, if people, after obtaining the loan, decide to go somewhere else. Our Agreement is clear, unambiguous and binding on us as well as our clients, once it is signed and executed. We do not charge fees until after the loan is sanctioned by the lending institutions. Thereafter, people should honour their Agreement with GFSL,” Mr Kumar said.

Comprehensive Agreement

The GFSL-Client Agreement is one of the most exhaustive documents that exist in the mortgage business. It sets out a step-by-step description of the application process, choice of banks available to the customer, options for fixing or floating interest, desired interest rate (where possible), the fee payable, obligations of GFSL and the customer, loan repayment schedule, income and expenditure analysis and a host of other issues.

“We not only insist that the customer reads the Agreement, but also confirms in writing to us that he or she has understood its contents and affixes their signature. Thereafter, it becomes a binding contract. It is of course the duty of the client to directly deal with the bank for serving the loan. We provide refinance and follow-up facilities. We want our customers to understand that we are here to provide them quality service and help them lead a mortgage-free life as soon as possible,” Mr Kumar said.

Since its establishment, GFSL has obtained more than $2 billion in mortgage loans to customers helping them to realise their dream of owning their own homes. Mr Kumar and his nine-member team maintain exhaustive records (both as paper and electronic files) of their customers.

The propensity

“Not that every customer is able to achieve early mortgage liquidation. People earning less than $65,000 (individual or combined) would inevitably take longer. Our initial discussion with clients is to understand their financial status, their expectations, their propensity to save and repay the loan. We also explain to them the lending criteria followed by commercial banks. We try to help everyone but do not hesitate to inform those whose applications are likely to be declined,” Mr Kumar said.

He said that KiwiSaver is a great boon to those with low incomes who may not immediately qualify for a mortgage or be able to pay 20% of the property value as deposit.

Read more articles about Global Financial Services Limited in this Special Report.

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