The value of a broker has never been more relevant
Updated: Apr 12, 2018
If you have turned on the news lately you would see the pressure facing Australia’s banking and finance industry from the regulators and more recently the Banking Royal Commission.
I’m not entering into if the Royal commission was needed or not, as this is somewhat of a moot point now, rather, it is important to understand the changes that are impacting banking and finance more broadly and how this affects you, the consumer.
First of all, what is clear already is consumer lending policy within Australian finance companies will continue to get tighter as a reaction to tougher regulation from ASIC and APRA (primary regulators for Banking and Finance).
So what perhaps could traditionally be achieved in finance may not be available going forward and this is where a good broker will become so much more valuable going forward. As different banks will diversify on points of policy and capability more and less on price.
In the last 18 months we have already seen a crackdown on interest only lending for both owner-occupiers and investors. To this point we are advising many of our clients that if they have capacity to be repaying Principle and Interest on their loans then they probably should. Not only can we attract much better interest rate pricing for principle and interest loans (up to 1% cheaper) it will be building equity faster in an environment where property growth can’t be relied on to deliver capital growth (in WA at least).
Further to this, exit planning for applicants typically over the age of 50 or where the loan term will take them beyond 70 or 75, is now a critical piece of the puzzle. Banks don’t like to rely on the sale of the family home as the primary source of repayment, rather they now want to see loan terms match the remaining working life of the applicants and assets available outside of the family home (such as super, shares, property etc) able to clear any residual debt at retirement age. Here having a broker working closely with your financial planning adviser is a clear advantage.
Ultimately, the environment that banks and financiers are operating in is changing quickly and there is no sign of this slowing down in the immediate future. It is unreasonable for the average consumer to understand these changes and how to best negotiate them. Here is where your broker can help by:
Inviting you to undertake a review of your mortgage
Developing a clear understanding of your personal and financial position, your Enjoy Factor!
Working closely with your financial planners, accountants and advisers to tailor a lending solution that compliments your financial and tax planning.
Identify opportunities where you can enhance your position by using the right loan products and structure.
Negotiate with your existing lender to achieve this or offer alternative options where you outgrow or don’t fit the lenders “box” anymore.
If it has been some time since your last review or you want to know if your mortgage is working for you, please contact us.