Rolf Latham said:
BUT, key is that most of them charge a rather stiff, (anti competitve behavious) exit fee that they do NOT include in their advertising, nor in the comparison rate tables, and the first the borrower hears of it is when they read the contract (or more often when they attempt to sell the property of move lenders)
Hi Rolf
Which is why I always involve my customers in the loan selection process.
My laptop is an 'open book' and it can be quite a lengthy process explaining to a customer the range (1,200 approx) of loan products, the difference between them, opening and reading the lenders' notes, loan descriptions, comparing loans over 30 years, printing out details of the loans, explaining and demonstrating mortgage insurance etc
Prior to assisting the customer with the actual loan application I hand over a 'Commission Declaration' which states in detail the up-front and trailing commission (if any) paid by each lender on my panel to my aggregator / association, Comparison Rate Schedules, and print outs of the specific loan details which the customer may be considering.
This includes any monthly or ongoing fees, redraw fees, 'deferred establishment fees' etc.
This way the customer is making an informed choice from the loans which I have access to from the view point of their current circumstances.
If the customer chooses a product which has deferred establishment fees on the basis that it is their current intention to keep the property, and should circumstances change, then the customer is making an informed choice on the likelihood of that change.
Obviously no broker has access to all loan products. No 'reasonable person' would expect that they had that access. No 'reasonable person' expects that the broker approves the loan or gives undertakings that a lender will approve an application.
However, a 'reasonable person' has every right to expect that the broker will have a good understanding of the lenders which they are accredited with and a good working knowledge of those lenders' loan products and eligibility criteria.
A broker is, after all, merely a 'go-between', an 'introducer', an 'agent' or a 'referrer', depending on the choice of nomeclature. However, it is reasonable to expect that that broker explain to the customer that while there may be hundreds or even thousands of lenders available, this broker holds accreditation with 30 or twelve or five, and therefore can only assist the customer in choosing an appropriate loan product available from those lenders.
The law exists to protect the weak from the strong. It determines that (in this instance) the broker is the 'adult' and the customer the 'child'. As such, the law protects the interests of the child.
Flamboyant advertising using superlatives such as 'best', 'right', 'cheapest' etc are outmoded and emotive terms which impossible to quantify.
Mortgage lending is not buying a loaf of bread, a brand of shampoo or a trip to Dreamworld.
It is easy to overlook that we are talking about significant amounts of money constituting an ongoing financial committment between two parties which is enforceable by law.
I may personally be genetically programmed to encourage other people to try, to give it a go and to venture forwards, but when it comes to brokering, there is no substitute for adopting a conservative attitude and making sure that the customer is informed and understands the working details of the loan products which they may be considering.
Best? Nah! No such thing. I drink coffee, you drink tea, which is best?
Cheers
Kristine