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Below is a series of questions developed by 'Your Mortgage Magazine' which should be asked prior to choosing a mortgage broker. Mortgage Brokers can help borrowers choose an appropriate loan and assist them in the application process.
Loans Australia has provided answers to the questions posed by the magazine to help consumers compare Loans Australia with any other mortgage broker in the market. Loans Australia calls our brokers, 'Finance Advisors' because our goal is to guide and advise our clients.
Q 1:
Which lenders (and which loans) does the broker have on their 'books'? Some brokers may recommend loans selected from more than 20 different institutions, while others may only consider loans from a couple of lenders. Make sure the broker deals with a spread of lender types (banks, mortgage managers and others). The larger and more varied the array of lenders and the number of loans, the more likely you are to find the most suitable loan for you.
Loans Australia responds:
Loans Australia offers residential loans from over 60 different lenders. See ‘Our Lenders’ to review our full lender panel.
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Q 2:
How does the broker get paid? Make sure that the broker does not let the size of the commission they will be paid by a lender cloud their judgment. While some lenders pay higher commissions, brokers should not favour higher commission-paying lenders over others.
Loans Australia Responds:
Loans Australia is paid a commission from the lender chosen and chooses not to charge the client an extra fee for residential mortgage selection and placement. As we aim to have a long-term relationship with our clients it is not in our interests or the clients to choose lenders on the basis of higher commission payments. All commissions received from the lenders are fully disclosed in the mortgage documents as legislated. All commissions received by Loans Australia are clearly outlined in the Finance Broking Agreement provided to the client prior to the application being completed.
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Q 3:
What fees does the broker charge? Ask the broker to clearly specify what fees and charges you will incur by using their service. Some brokers charge no fees - they receive a commission from lenders when borrowers take up a loan that was recommended to them. Others will charge you a one-off fee.
Loans Australia Responds:
We do not charge any fees for residential home and investment loans. We are paid a commission by the successful lender at no cost to you. You will be charged no more than by going to the lender directly. We are a 100% free Australia wide home loan service.
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Q 4:
Ask the broker how they compare loans and how they determine which loan is best for you. Comparing loans is not an easy task. Make sure the broker can provide you with a clear explanation of the methodology and criteria they use. If they are unable to do this be wary, as they may be basing their decision on the size of the commission they will receive.
Loans Australia Responds:
Loans Australia uses the following system in order to determine which product type is the best for a client and how different lenders compare and meet your overall needs for the cheapest price. We call our system the 'funnel process' and it will:
- Ultimately arrive at the product/s that meet your needs
- Ensure you understand the features of the products and how they benefit you
- Determine that you have complete confidence in the product chosen and that it is the right tool to meet your financial goals.
The Funnel Process
- Determine your finance goals both short term and long term. We use the 'know your client' needs analysis to understand your individual needs and circumstances and how this may affect your borrowing potential.
- Establish your 'must haves' 'must nots' or 'indifference' to lenders and available mortgage products.
- Clarify your current financial situation, the loans process and timeframe.
- Determine your borrowing capacity.
- Compare and contrast the top 5 lenders that meet your needs and requirements, have competitive interest rates, the lowest fees and charges, and who will lend you the amount required. In addition Loans Australia will provide you with an approximate costing of the loan costs eg stamp duty, application fees, mortgage registration, valuations etc. Your solicitor will determine the final exact costs closer to settlement.
- The Loans Australia 'compare and contrast' method incorporates state of the art software - however it takes more than a computer to work out the best and most appropriate home loans for you. Your financial situation is unique to you and we advise that you use a mortgage company that looks beyond a computer printout when offering you options.
- Only when you are completely satisfied with the product chosen do we complete and forward an application to the chosen lender.
To find out what happens when the application is submitted to the lender see our Loan Transition System and What We Do For You.
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Q 5:
Find out the comparison rate of the loans recommended to you. This rate takes into account the loan interest rate as well as upfront and ongoing fees and charges to give a better indication of the actual cost of a loan. All brokers should be able to provide you with these rates. If they can't, be skeptical.
Loans Australia Responds:
Comparison rates for all our lenders are freely available on the lenders website. They are also available from Loans Australia's office at anytime on request.
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Q 6:
See if the broker is a lender themselves - you don't want a mortgage broker recommending loans to you if they offer their own loans (unless you can be guaranteed that they always recommend the best loans and do not lean towards their own).
Loans Australia Responds:
We are not a lender; we only offer the loans of other lenders.
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Q 7:
You are within your rights to ask for proof of professional qualifications, information on the broker's experience or references from other clients.
Loans Australia Responds:
The management of Loans Australia has extensive experience in the mortgage broking field. We have outlined the professional experience of our management team under Management Profiles. Loans Australia utilises the services of an independent third party company to survey our clients in regards to the level of professional service they receive. The survey results are found in ‘What our Clients say about Us’.
A Loans Australia Finance Strategist has achieved a set education and experience level as part of their employment criteria, abide by a strict Code of Practice, and are a member of the Credit Ombudsmen Service.
Loans Australia and/or its Managing Director have professional membership of the following organisations:
- Australasian Institute of Banking and Finance
- AON Professional Services
- Connective OSN (Provides Aggregator Services)
- Credit Ombudsman Service Limited
- Finance Brokers Association of Australia
- Financial Services Institute of Australasia (FINSIA)
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Q 8:
Does the broker have professional indemnity insurance? Make sure they do. It covers them in the event that they are sued for negligence or breach of professional duty. This means if you have to take legal action against them for some reason, they will be insured against this.
Loans Australia Responds:
Loans Australia has Professional Indemnity Insurance in place at all times. While we take this insurance out for own needs it is also a requirement of our accreditation with the Finance Brokers Association of Australia.
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Q 9:
Ask what privacy guidelines they follow when handling your information.
Loans Australia Responds:
Loans Australia comply with the Privacy Act Credit Reporting Provisions and the National Principals for the Fair Handling of Personal Information. Loans Australia is also governed by the Privacy Act 1988 which enforces the privacy of your personal information. Your financial, contact or other personal details are assessed for the purpose of organising your home loan or associated financial services and are not passed to any external company except the lender with which we organise your loan and with your express written permission. Please see our Privacy Policy for more information.
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Q 10:
Is there a complaints resolution process if you're dissatisfied with the service?
Loans Australia Responds:
If you have any issues or complaints in relation to any aspect of dealing with Loans Australia please direct your enquiry to:
Compliance Manager
Loans Australia
PO Box 1068
Hampton North Vic 3188
If you have any issues or complaints in relation to the collection, use or management of your personal information please direct your enquiry to:
Privacy Officer
Loans Australia
PO Box 1068
Hampton North Vic 3188
Disclaimer: 'Your Mortgage Magazine' does not endorse Loans Australia or its answers to these questions. These questions were taken from www.yourmortgage.com.au.
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