Your broker and your best interests.
It is no secret that since the Royal Commission into misconduct in Banking in 2017, the lending space has become a more stringent environment and obtaining a loan is not as smooth and easy as it once was. Strict policy changes within the banks, increased requirements and provision of supporting documents as well as well as COVID-19 have all meant securing your loan has become harder than ever. Historic low interest rates over the last two years has meant a flood of refinance lending above the norm, which means longer wait times to approval - a key driver in bank choice with most customers. So with all these changes in mind, how do you manage to not only secure a loan which is appropriate to you, but suits your needs and takes into consideration your long term plans? A mortgage broker.
Did you know that more than 2/3 home loans nationally are written by mortgage brokers. Between July and September 2021 mortgage brokers facilitated a record high of 66.9% of all new residential home loans, according to the latest data released by research group comparator, a CoreLogic business, and commissioned by the MFAA. (read more: https://www.mfaa.com.au/news/more-than-two-in-three-home-loans-written-by-mortgage-brokers).
But, how can a broker help me and how does a bank differ?
Best Interest Duty
What this means is that people are looking for expert help in navigating the lending space to help find the right loan for them and to ensure it is handled in their best interests. Since January 2021, The best interests duty for mortgage brokers is a statutory obligation for mortgage brokers to act in the best interests of consumers (best interests duty), and to prioritize consumers’ interest when providing credit assistance (conflict priority rule). These two obligations are collectively referred to as the Best Interests Duty. Based on the Royal Commission’s recommendations, it aims to align “consumers’ expectation and interest with that of the interest of the mortgage broker.
In short, it means that mortgage brokers are to act in your best interests when providing credit assistance whereas a lender has no legal obligation to do so. Brokers need to document the who, what, where, how and why they choose the banks they do, why they have chosen the products and structured your loan the way they have and to take into consideration your longer term objectives when considering a loan product.
30:1 - That’s a big difference.
Brokers have access to over 30 different lenders to help you find an appropriate lender for your individual situation. There are no two deals alike - your circumstances may appear similar to others, however everyone’s finances are unique to you and what this means is that so are the banks. With access to over 30 different lenders and over 500 loan products, brokers have the flexibility and tools to search through multiple options for you and provide comparisons to find you the best fit for you. A holistic approach is taken, with consideration to interest rates, lender assessment time frames, bank policy and cost as well as others.
Working 9 to 5!
Mortgage broking is not a typical 9 to 5 job and client needs dont stop just because the banks shut. Whilst some brokers will keep to a 9 to 5 business day, most brokers will be there to support you through out the week, taking calls after hours, late night appointments to suit your availability and can also assist over the weekend at auctions to ensure you are well informed and feel comfortable you understand what you are doing. Without sounding patronizing, brokers are there to hold your hand through the process, whether you are a first home buyer, or an astute investor.
Ongoing Support
For the life of your loan, your broker is there to help you. Whether that be to obtain you a better interest rate when possible, refinance to a new lender, help with your next purchase or finance a new car. Mortgage brokers have the tools, know how and expertise to help you at any stage in the process.
If you are looking for someone to assist you with your lending needs, see how I can assist, get in touch today!
Christopher Pharr is an authorised credit representative (Credit Representative Number 527601) of QED Credit Services PTY LTD (Australian Credit Licence Number 387856).