Mortgage brokers need to lift their game and improve services for customers

Mortgage brokers have been told to improve their services offered to customers to ensure they put them on a good home loan deal.

When customers sign up to a home loan or refinance many debate whether or not to use a mortgage broker.

But after reading a recent report by the nation’s corporate cop I would suggest thinking twice before using one and if you do make sure you get them via a solid recommendation.

I’m not saying brokers don’t have their place — they most certainly do but you need to carefully choose who you use.

Like anything really, go on word of mouth not by scrolling the internet.

But after reading the Australian Securities and Investments Commission’s recent report, Looking for a mortgage: Consumer experiences and expectations in getting a home loan, it left me wondering how these so-called professionals get away with the following:

• 58 per cent of consumers received two or less loan options from brokers — some were even just one loan recommendation.

• Brokers were inconsistent in how they presented mortgage options to customers.

• Consumers did not clearly understand how brokers were paid.

• One in five consumers believed they could have scored a better interest rate or they weren’t even sure if they got a good rate.

• And sadly one in 10 consumers said they were struggling to meet their mortgage repayments.

Mortgage Brokers can be helpful when starting out. Picture: Thinkstock

USING A BROKER

I’ve used a mortgage broker and he was certainly helpful when I signed up to my first mortgage back in 2012.

He offered me three loans to choose from which I thought was good enough.

But seriously, brokers offering one loan, are they kidding themselves?

And consumers shouldn’t buy this.

Being handed one mortgage gives them zero options.

They need choice and if they are going to use a broker it’s the broker’s job to give them a decent selection to choose from.

This allows the customers to make an educated decision on which loan is better for them at the time.

My mortgage broker also helped me take out a new loan on another property in 2015.

But since then he’s done nothing for me except send me a few flyers in the mail and an email every month so I don’t forget who he his.

Oh and he sends me some jelly beans and a card on my birthday.

In the last few years I’ve managed to wangle my own out-of-cycle interest rate cuts myself — he tried once for me once and failed.

I rang up soon after this happened and got a drop myself my own rate cut.

This has happened multiple times where I have got interest rate reductions just by asking.

If you do your research and understand what is a good deal, it’s definitely worth phoning up your bank and asking for the home loan retention team.

Tell them you are going to shift lenders if they can’t do better for you.

Throw a few better deals available out there at them and explain that you’re happy to move lenders to save yourself some serious cash.

Trust me, talking tough with them works.

They don’t want to lose customers.

Loans can be denied by lenders. Picture: Supplied

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COMMISSIONS

Brokers need to spell out loud and clear how they are getting paid.

While most home loan customers who use a broker know they don’t pay the broker themselves — instead the bank pays them in commissions — this needs to be clearly explained.

You need to understand how they are getting their cash because it may impact which lender they choose to offer you.

And brokers may try and do a hard sell on you by getting you to sign up to another loan down the track and the reason being is they are making money out of you.

Fair enough, it’s their job.

But remember, they are salespeople, they need you to spend for them to earn.

There’s tens of thousands of home loan products on the market and it can certainly make your head hurt trying to find the right one.
But this important fact must be remembered — brokers do not have access to every loan product on the market.

Couples need to be aware of where they could be missing out on deals when signed up to a mortgage. Picture: iStock.

This means you could be missing out on some rock-bottom deals on the market by simply going with a loan recommended by a broker.

And this will cost you money in the long run.

Smaller lenders and online lenders are among those who are sometimes not offered by brokers.

These smaller guys who don’t pay brokers won’t be spruiked by brokers, plain and simple.

This means they often offer cheaper deals than you can get through a broker because they are not paying anyone to lure customers in the front door.

The Government recently revealed it would roll out a best interests duty for mortgage brokers by the end of 2019.

This should make the brokers who were behaving badly pull up their socks and hopefully end up giving you better choice and save you money on one of the biggest financial decisions of your life.

@sophieelsworth

TERRY McCRANN IS ON LEAVE.