Choosing the Home or Investment Loan that’s right for you
David Harris, Portfolio Capital Pty Ltd
26th November 2015
In today’s financial markets, especially the residential mortgage sector, we are spoilt for choice. With literally hundreds of providers and thousands of loan products, how do we as consumers sift through the facts and make a choice that we can be confident is the right one?
Too often we don’t. We take the line of least resistance and go to the bank we’ve dealt with for years. I equate this to shopping for a new car and expecting a fair and reasonable comparison between Holden and Ford from the Holden Dealer – it just doesn’t happen.
Back to mortgage lending, we in Australia have publicly owned banks (large, small and everything in between), customer owned banks, building societies, Credit Unions and Mortgage Managers to choose from. Furthermore, some are state based, others are national and still others are industry based. Many are owned by each other.
As individual consumers we generally wouldn’t have access to the majority of these – not because they’re not available to us but because we simply don’t know they exist. And yet they often have innovative products and extremely competitive pricing structures. They can be as much as 50 basis points lower than the ‘majors’ in some instances. That equates to a lot on money in (or out) of our pockets.
So the big question is how do we access a broad range of options and then decide on the best choice for us.
1. The Internet. The internet does provide a platform to research what’s available in broad terms. The results you receive, however, are largely dependent on the terms of your search, which advertisers (overt and covert) are paying for which ‘adwords’ and search terms and many more factors that influence the positioning of their Google listing. Let’s face it anything beyond page 1 of Google is a graveyard – most of us don’t go there.
Then there’s the time factor – you can spend many many hours researching and still only be confined to a few ‘big names’.
2. Talk to your own bank. Banks rely on a combination of loyalty, inertia and apathy to capture their existing customers when it comes time to apply for a home or investment loan. After all, they have our savings, our other loans, our credit cards – why not our mortgage?
Think of the car analogy – you’re not going to hear one bank tell you that they’re a bit pricey at the moment but the lender down the road can save you a bit of money.
3. Talk to friends and family. Everyone becomes an expert but despite the best of intentions, rarely do they have the knowledge and expertise to properly analyse your needs and match those to products that best suit those needs.
4. Talk to a Mortgage Broker. Mortgage Brokers are experts across a wide range to lenders and lending scenarios. They are generally equipped with sophisticated tools that enable them to accurately calculate borrowing capacity across all their lenders, capture critical data enabling them to match your criteria against available loan features and present you with a range of options that best match the criteria – both in terms of your requirements AND cost.
Your mortgage broker works in the best interest of YOU – not the bank or its shareholders.
As of the September quarter 52.6% of all home loans were written via mortgage brokers. The reason for this is simply high levels of service, ease and convenience – dozens of lenders and hundreds of products analysed, filtered and compared all in one place.
How do Mortgage Brokers get paid?
Mortgage brokers are paid a commission by the lenders and generally do not charge their clients any fees. There are exceptions to this latter point based on either individual brokers’ business models or, on occasion, the complexity of a loan application. You should check this aspect prior to proceeding.
The commissions brokers are paid do not influence the rate or fees you pay on the loan – these are the same as those offered directly by the lender.
Are Mortgage Brokers regulated?
The mortgage broking is highly regulated with oversight by the Australian Securities and Investment Commission (ASIC). Broker must hold an Australian Credit Licence or be appointed an Authorised Credit Representative by a Credit Licensee.
In order to operate they are required to maintain minimum education standards, undertake constant professional development, carry high levels of professional indemnity insurance, adhere to strict industry codes of conduct and, of course, must satisfy a criminal history check. These are significantly higher standards than those imposed on the branch staff at your local lender.
Talk to us.
We offer a free consultation to review your current loans or to help with your new loan requirements – you might be surprised at just how much we can save you. We have a large range of lenders to choose from and work hard to make sure that you get the loan that is right for you – not just for today but for your future as well.
Portfolio Capital Pty Ltd
info@portfoliocapital.com.au
www.portfoliocapital.com.au
07 31391372
