REFUND HOME LOANS
Business Est: 2004
Number of staff: 300 franchises
Growth: 47.6 per cent
Turnover: $15.5 million
Sourcing from banks ‘without fear or favour’ or shop front overheads, Refund Home Loans has grown rapidly in the Australian mortgage market by offering 50 per cent commission refunds on home loans. Expecting revenue growth of up to 75 per cent this year, CEO Wayne Ormond wouldn’t accept so much as a bottle of wine from a lender. He tells Brisbane Business News how the only incentives he’s interested in are for his customers.
Choice is one of the main reasons why some prospective home owners turn to brokers instead of banks, but Refund Home Loans executive chairman Wayne Ormond points out competitors like Aussie Home Loans and Mortgage Choice have their hands too tied up to give neutral advice to clients.
“Aussie Home Loans is owned 35 per cent by a bank, so their job as a business is obviously to protect that bank’s interests since they’re a shareholder,” he says.
“I don’t take any incentives. I don’t even take a bottle of wine from a bank or a lender at any point, I don’t have them sponsor my conferences, I don’t do anything and if you have a look at some of the other systems they all do that, and I think it’s those soft dollars that in a way corrupt the integrity of the organisation.
“We are a consumer advocacy, we want to work for the customer, we want to find them the best deal and we don’t care what bank it comes from.”
But when it comes to Refund’s real point of difference the price is certainly what has driven the franchise ahead over the past five years, offering 50 per cent commission refunds — or more, depending on the franchisee.
So with brokers undercut by what can often be around $1000 per transaction it is understandable how industry was up in arms when the company was established in 2004.
“What has stood in my way? Everything, but we steamrolled over the top of it.”
Safe as houses
When queried about the US sub-prime mortgage crisis, 36-year-old Ormond speaks at length about how Australia averted something similar because of the nation’s policy on recourse lending.
Passionate about the benefits of Australian banking law, he is very conscious of running a low-debt business, as well as being upfront with customers who aren’t eligible for loans.
But he does believe in the ‘Australian dream’ of home ownership, with a philosophy to sit down with customers and talk about their options and what they might be able to do.
“I think actually owning a property in Australia is the best investment anyone can ever make. No matter what all the financial advisers say, ‘put it all in the share market, this that and the other’, well I call people’s attention to the last 12 months — how did that go?”
He also appears confident that housing prices will continue to double every 10 years and that people will have the capacity to pay off their loans.
“Well I think people can pay it off. If you get into the market when you’re 25 and you’ve got a 25-year term then by the time you’re 50 you own your own house – that’s not a bad position to be in.”
When it comes to his own business, Ormond has very little debt, which fluctuates between $500,000 to $1 million, for the business he estimates is conservatively worth around $50 million.
Refund Home Loans is expecting revenue of at least $15.5 million this financial year and in the aftermath of the Mortgage & Finance Association of Australia’s (MFAA) decision to raise the bar for lending standards, Ormond escaped unscathed.
“The MFAA expelled about 10 per cent of its members because they weren’t qualified and I’m happy to say that out of 13,000 brokers in Australia they kicked out 1500, and none of them were my people.”
Providing a range of loan options at a lower cost than most brokers, Ormond cites the third advantage of Refund being the convenience factor, as people have less time to go to a bank or a broker during office hours – his business model operates at the franchisees’ homes, so visiting hours are flexible.
Handing over the keys
After five years in business Refund Home Loans is just 100 distribution points short of Mortgage Choice and Ormond expects to make this up in the next 12 months, with several expansion plans undergoing renovations.
“I think we’re looking at a multi-faceted approach and a real consumer brand with Refund, and looking at entering into other models — financial planning as well as property real estate is another, and we’re already involved in general insurance, finance and leasing products,” he says.
“So there’s a real opportunity for us to do something different. I want to build the largest mortgage distribution channel in the country and I’ll do it. I’ll do it in the next five years and I’ll still be ahead of the game.”
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