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As mortgage brokers active in the industry, we know that there are some good deals on offer from lenders at the moment in Australia, with intense competition largely driving interest rates down. Many of our clients know this too, as it’s been reported quite often in the media.
From what I’ve witnessed, the interest rate discounts on offer have never been so good – borrowers can now get as much as 1.2 percentage points off the standard variable rate, which was virtually unheard of before. In the past the highest discount was less than one per cent and that was almost impossible to get; it was only available to those borrowing millions of dollars, but now it’s available to those borrowing far less.
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With some very attractive interest rates available for borrowers, mortgage brokers should simply be going out into the marketplace to find the best rate for their clients and signing them up to that, right? Well, not exactly. The best rate doesn’t just reflect the best deal. While brokers should indeed be seeking to get their clients the best rate, it shouldn’t be the sole focus. Rather than simply going after the product that offers the lowest interest rate, mortgage brokers should be finding loans for their clients that are best suited to their particular circumstances.
A good rate is a given at the moment, so borrowers – and their brokers – need to consider all the facets of a loan before jumping in, including, for example, whether it has an offset facility, whether the borrower can have a fixed rate but still pay more if they choose, and whether valuations can be ordered upfront to take advantage of equity in a moving market. The loan needs to be a product that suits the borrower’s objectives and needs, giving them the flexibility they require and working for them for years to come. Essentially, brokers should provide an all-round service to clients, helping them to work towards their future financial goals, and the loan type can be a big part of this.
Clients, understandably, are very focused on interest rates as they want to go with the most affordable option, and of course banks have made this their biggest selling tool. But to provide the best service to a client, my advice would be for brokers to find the right loan product for their client, and then negotiate with lenders to get the low rate the client is after. With such intense competition in the market, there’s an option of getting rates lower than the carded (or advertised) rates, so you are likely to get the best of both worlds: securing the most competitive rate for the loan product most suitable for your client.
Having a good relationship with the business development manager (BDM) at each bank will be imperative to any mortgage broker trying to secure the best loan for their client, at the best possible rate. If you know the BDM well enough, you will have the ability to negotiate.
It’s also important to bear in mind that even though a particular loan may offer borrowers the best interest rate available, if they find in one or two years’ time – or even more – that the product isn’t working for them and they need to switch to something else, it can end up being much more costly with break fees than if they had paid a higher interest rate from the start. It’s our job to educate borrowers about these potential risks and highlight why it’s so important to have the right product from the start. After all, we do have a duty of care to ensure we do what is right for the client.
At the end of the day, the client should always be provided with a comparison between different loan products, and they will make the decision they feel is best for them – but all of those options should be ones you, as a broker, consider to be suitable for their circumstances.
Ruan Burger, managing director, TIME Home Loans
Ruan Burger has been in the mortgage broking business for nearly a decade, starting out in the booming town of Gladstone after working in the banking industry for many years. He formed Time Home Loans early in 2013 after moving to Brisbane and the business has grown significantly since then.
Ruan is a nationally recognised member of the MFAA. During his career as a mortgage broker, Ruan has won – and been a finalist in – several awards. He won the MFAA Mortgage Broker of the Year award in 2012 and 2013 as well as the MFAA’s Award of Distinction in 2012 and was a finalist for the MFAA’s Credit Adviser award in 2014.
Ruan believes it is his ‘love of the game’, his strategic alliances and colleague morale that promote his business as a leader in the field.
