On a daily basis you are likely exposed to “offer after offer” to refinance your home loan or help with your next car loan, debt consolidation – the list undoubtedly goes on. Lenders, Brokers and Bankers are all vying for your business in one capacity or another. The demand and appetite for new business is very strong, and will likely remain that way as many new entrants enter the lending market.
Neo Banks are trying to make a presence in the Banking space and Buy Now Pay Later (BNPL) businesses such as Afterpay are dominating the millennial market.
So how do Finance Brokers and Mortgage Brokers differ to Lenders and Banks?
Finance Brokers or Mortgage Brokers (“Brokers”) are generally small to medium business operators providing a choice of Lending solutions to their customers. The majority of Brokers are members of an Aggregation Business (think AFG, Connective, NFC) who provide them with access to a wide selection of Lenders and Products. This allows Brokers to provide you with choice. Any one Brokerage will have access to upwards of 20 lenders, and it is the Brokers job to explore these Lenders and provide you with options that best suit your Requirements and Objectives.
Brokers operate independently and have no alliance to any particular lending institution – their recommendations will be (and should be) impartial of any particular lender. Unlike a Lender. who can only provide you with the their own Products and Services; a Broker can access a variety of loan product options through their Lender Panel. Lenders products can vary significantly, The second tier Lenders such as Pepper Money, Latitude Financial and Liberty Financial are very competitive in the asset finance space, and are quite often cheaper than their peers. They offer very competitive car loans, caravan loans, motorcycle loans and equipment loans.
Life is complicated enough at times, so having to phone around or go online to find out who has the best deal for you; can be very onerous. Brokers, do all of the running around for you. They often charge a Broker Origination Fee to cover the cost of exploring your options, as well as preparing, submitting and following up settlement of your application. They will also negotiate with the Lender to get you the best deal possible from the chosen Lender. When appointing a Broker, you will be asked to sign a Credit Guide and Credit Quote which provides more detail around the expected fees payable and the terms of service. These documents are a must read, and acknowledged upfront before the Broker performs any work on your file.
Having worked in finance for over 20 years i understand the complexity of Lender Policy – what they will or will not approve. And it is overly complex. So imagine you have spent so much time researching a Lender and their Products. only to find they decline your application. It happens so often. As part of the service that Brokers provide, they will not only find you the best product for you but also balance that with the Lender that is likely to approve the loan.
Brokers put your interests above their own. The Best Interest Duty (BID) was recently introduced as a result of the Hayne Royal Commission. BID has certainly reinforced (in law) to Brokers that their customers interests must always be put above their own. Banks, Lender’s and Finance Operator’s in Car Dealerships are not covered by the Best Interest Duty,
Brokers will provide you with the specialist advice you require when searching for a loan. That’s what they are qualified to do. They will gather your information, search the market and provide you with a Loan that meets your requirements. They prepare the paperwork, submit the application and handle the settlement process for you, Many can also provide assistance with locating your vehicle, insuring it and protecting it.
When searching around for a Broker, perform the simple checks to ensure they are reputable. Do they have FBAA and/or MFAA Membership? Are they Members of AFCA? Check out their Reviews on Google and Social Media.
yesapproved.com.au is a Perth based Finance Broker servicing the needs of all Australians. We provide honest and open advice, and always have your best interests at the forefront of our service.
The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.
Any advice contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs.