Mortgage Brokers make up almost 42% of all loans written today, across Australia.
That statistic is quite amazing and really shows just how integral Mortgage Brokers have become in the finance process. Whether you are buying your first home, upgrading to another family home or investing in property, Brokers play an important role in the decision making psyche of the Australian public.
I’ve had over 30 years’ experience in the finance industry and in my view a borrower has an unprecedented opportunity to access the knowledge and experience of industry professionals as they do today.
- The Finance industry is heavily regulated by Government legislation that ensures the customer’s specific needs are met, each time they want to borrow.
- Borrowers are provided with clear, simple documents that clarify the reasons behind the option put before them.
- Mortgage Brokers are usually paid by the Lenders, not you.
- Full disclosure of any commissions and possible fees are made before taking up a loan offer.
- Mortgage Brokers have many different Lenders to choose from which greatly increases the chances of finding the solution you need, quickly and efficiently.
- Mortgage Brokers are required to be a member of a Professional governing body such as the MFAA or FBAA to enable them to lodge loan applications with Lenders.
- Mortgage Brokers have to achieve set industry specific education standards before they are accepted by any of the Aggregation Groups.
In short, all of the legislation, the compulsory training as well as industry expectations mean that the Customer is the sole focus for any Mortgage Broker worth his/ her salt. The current conditions have given the customer an experienced ally whom they can turn to when faced with a major financial decision.
Mortgage Brokers are extremely well educated for their purpose of providing options for borrowers.
I note that Banks do not require all of their loan officers to reach the same level of professionalism yet they are put into a similar position of providing advice. I think that’s unfortunate. Of course, Banks also do not offer any option other than their own product either which raises a few questions. Isn’t it possible that there is a product out there that is better than what one particular Bank is offering on any given day ? Is CBA always the best? What about NAB? Isn’t it possible that ANZ and Westpac have products that are better suited to some situations? Just because you bank with them does that mean they will treat you better than anyone else?
Then of course we have the non-majors and the non-Banks to consider. It seems to me that these Lenders are even more competitive than the Banks for certain customers and conditions. But if you don’t know about them then how can you consider them.
One thing that stands out above all to me is that having access to all of these Products can be overwhelming if you approach it the wrong way. The answer to whether a Lender has the cheapest rate overlooks the fact that you may not qualify for the amount you want or that the security you are offering is not acceptable to them. Finance is made up of a delicate balance between what the Lender will offer and what your situation actually needs. For example, there is a trend right now for Lenders to reward new borrowers by giving them lower rates if they borrow less than 75% LVR. This looks very attractive until you are in a position of needing 80% LVR. Why does the 5% mean a higher rate?
I think its far more productive to find the answer to how much can I get rather than what is the best rate. After all, the 5% difference with a lower LVR on a property worth $500,000 is $25,000. The benefit to putting in $25,000 may be a reduction of 0.10% which, on a loan of $375,000, is $375 per annum. So the equation is to spend $25,000 to get a lower rate by 0.10% and only save $375 per year. So much for chasing rates!
Of course, this is but one example of what will face you if you start looking at finance by yourself. Clearly we are spoilt for choice these days. Nothing wrong with that is there? All you have to do is make a decision on which of the possible four hundred Lenders products is the one for you.
If that sounds too daunting I’m sure you will appreciate the fact that by contacting a professional Mortgage Broker you can experience the excitement of narrowing down all of those product to the ones that meet your needs. Only then will you find an appropriate solution.
It’s certainly a great time to be a borrower.