The last few years have seen many changes in the banking industry.
Between the findings of the Royal Commission, the introduction of Best Interest Duty (BID) and now a pandemic related economic depression – there’s been a lot of adjusting and adapting.
Through all this turbulence – there has been a really important message to come out of it.
Whether it’s a piece of advice or a loan, whether it’s a bank or a finance broker – the client’s best interest should be at the forefront of every dealing.
Taking out a loan is a big decision – a huge financial commitment. So how can a finance broker (or mortgage broker) help you in this process?
Navigating Loans in a Post Royal Commission Era
Borrowing money today is harder and more complex that it was 5 years ago, with lenders being more risk averse than ever.
This means now, more than ever, it is so important to get your application right, the first time.
There is a lot more that is taken into account now, post Royal Commission. With the introduction of Comprehensive Credit Reporting (CCR) lenders are able to not only see the past two years of your repayment history across all of your credit facilities – they are also requiring more personal financial information for loan applications.
Applications are more detailed, scrutinising all aspects of your spending and saving. This is a good thing – it works to ensure lenders are being responsible. But it also makes applications much more detailed – and there are so many ways to get it wrong.
If the information is not provided correctly – the bank will knock back the application. EVERY application you have made shows up on your credit report and affects your credit score.
A finance broker can ensure you get the application right before you submit – and you submit your application to the right bank for your situation.
Sometimes it is a matter of picking your mark, by knowing which lender looks at things in certain ways or other things that are non issues to others.
If your finance broker is aware of potential issues before an application is presented to a lender, they can either try to have those things fixed before you submit – or at the very least, try and mitigate the issue.
What Does a Finance Broker Do?
Put simply – a finance broker works with you to assist you in gaining a loan. It might be for the purchase of your dream home, property investment, motor vehicle or equipment.
This can save busy people a lot of time and effort in shopping around.
It also means those who are new to the process and a bit unsure of how it works have someone who can guide them through it – and advocate for them.
Finance brokers prove their value when they can find you a loan that suits your needs with the right terms and a competitive interest rate.
One way to look at it is – when you go to a bank, the person you sit down with is an employee of that bank.
When you see a finance broker to seek borrowing advice, that broker is often an employee of a business offering financial solutions.
The key difference – they are employed to find the right solution for your situation.
Many people like to use a finance broker because it means an expert is presenting them with different options, rather than them shopping around themselves.
What Are The Advantages of Using a Finance Broker?
When a customer deals directly with the lender, the bank only needs to consider themselves – and the products they offer – in terms of that customers’ best interests.
However – a finance broker has the ability to consider ALL other options on the table that might suit that clients best interest.
Put simply – going directly to a bank in the current format of the banking system can potentially leave you at a disadvantage.
A bank MUST offer and advise you based ONLY on the products and services that will suit you.
The problem here is that while a bank might have a large range of products or offerings (as many do) – they only belong to that bank.
Banks don’t work for the client – finance brokers do!
Trusting the Experts
If you own a Ferrari, you generally don’t take it to the local Caltex for maintenance.
You’d prefer to take it to the specialist, who works on Ferrari’s everyday, right?
You need to think of your business and your finances in the same way.
Each of the banks have different ways of doing things. They will change their appetite for different things at different times.
Finance brokers work in this field everyday. They are there to find the solution to your lending needs – and they work for you, the client. They understand that your business and its finances are precious. It’s what you build your wealth on – and how you feed your family.
They are there to take the pressure off you needing to trawl through the irrelevant information and find the solution that best suits you.
Someone to Help You Compare Deals
A finance broker will take the time to sit down with you and show you the differences between the banks and what they’re offering.
They will show you the different products to compare and outline how these differences will affect you.
And when it’s time to review your loan, they can step in and make sure that the bank is still sharp and delivering great rates and products for you.
If you’re currently considering your loan options and wondering whether to engage a broker – give us a call.
Our finance Broker Justin will outline how he can help you.