Good Customer Outcomes – Refinancing Not the Best Solution

  • 22 January, 2021
  • Greg Pierlot

Providing Lenders and Brokers work together, the Broker involvement should not necessarily result in refinancing to another institution.

With the right mindset on the part of both parties, Finance Brokers can help Lenders retain & improve their existing client relationships.


We were recently approached by an experienced small business owner to assist with refinancing their facilities.

The business owner had a financing need, but had no contact or relationship with his existing manager, as a result, was seeking to move elsewhere.

The Request

In addition to the relationship issues, the client felt the interest rates they were paying were not competitive and wanted these reviewed.

They were also seeking an increased loan facility to take advantage of future opportunities.

Know Where You Stand

As a first step, we undertook a full review of client’s situation/business and their loan facilities.

We then approached the market to ascertain the appetite for refinancing and the increased loan request.

Strategy - Not to Refinance

Whilst opportunities to refinance existed, we felt it may be more in the client’s interest to remain with their existing Lender providing the:

  • Relationship issues could be remedied
  • Pricing was market competitive
  • The increase sought to allow them to take advantage of opportunities was satisfied

The rationale for our recommendation was:

  • They had a long and sound track record with their existing Lender
  • Changing Lenders is something this business owner preferred to avoid, as it may be disruptive

(A recommendation to stay is only possible if it is in the best interests of the client and they prefer to stay. If the relationship has soured and is unsalvageable, from the either the client or Lender perspective – staying is not an option)

With the client’s agreement, we then approached senior management at their existing Lender.

Good Customer Outcome

By working with their existing Lender, we were able to negotiate:

  • An interest rate reduction that delivered a saving of $54,000 over the life of the loan
  • An establishment fee of only $1,200
  • The increase in borrowings they were seeking

Recognition for Work Involved

Generally, if a client chooses to remain with their existing Lender, and there is no increase in borrowings, the Finance Broker is not paid.

However, in this instance, the Lender recognised:

  • The work we had put in preparing the Proposal and negotiating with the client
  • That without our involvement, this valued relationship would have been lost to a competitor

As a result, they paid us the same commission we would have received had the borrowings been refinanced to another Lender.

This is a good example of how Lenders and Brokers can work together for the benefit of a client.