YOUR FINANCES: TRANSACTION OR RELATIONSHIP?
Updated: Apr 9, 2019
Securing your finance is surely more than just a transaction that you are happy to trust anyone with?
To have the responsibility of gaining a competitive deal that is best suited to your circumstances now and into the future!
If you have been fortunate enough to have a great working relationship with your bank or mortgage broker, this answer will seem very obvious to you. If it was a simple transaction we would all be searching the internet for that ‘best’ interest rate and completing the application forms ourselves and trusting the people behind the scenes at the bank to walk us through the rest. Sounds pretty easy doesn’t it?
Why is it then that we still see the majority of mortgage applications shared between the major banks?
Why is it that we also see that brokers now account for over 55% of all mortgage applications with this trend continuing to grow? The answer is relationship and service.
Mortgage borrowers are more increasingly likely to engage the services of a mortgage broker to assist their mortgage requirements. A good broker will not only find a competitive rate, they will also consider relevant personal circumstances of the borrowers who might be better suited to lending policies with particular banks.
Customers can waste their valuable time and effort by lodging loan applications to lenders that might not meet their specified criteria. All banks have niche markets they like to promote and others have a different appetite for the business they seek. Understanding each banks different niche’s or their deal breakers is something a broker needs to consider from the outset.
Many years ago customers would see a broker being someone that shopped the market to achieve the best rate and then lodge an application. It sounds great in principle however not quite as easy as that. The critical aspects for any customer looking for a mortgage can include a balancing act between best possible price, policy requirements, niche markets available, turnaround times, customer service, internet banking systems, convenience, ATM networks, loyalty points for credit cards, product variations between lenders, and numerous other factors.
Rates are extremely important to borrowers, however it should never be the headline act from a lender. If you buy just on rate you open yourself up to many other issues. All the above items need to be considered when selecting the correct fit for the client. Do you pay too much to have an offset account, are no frills loans more attractive based on their rate, why do I pay a package fee? All these are good questions, however understanding what products suit you best is not always easy for the client.
Try searching the web to see which bank might offer you the better deal. It’s easy confirming all the bank’s standard variable rates however what discount will the bank be willing to give you as a new client over and above their advertised discounts shown? If you are a client it might take a while to chase that information and then it needs to be accurate.
We can deal with various levels of experience when we make a call to a bank, walk into a branch, or engage the services of a broker. How do you know that the person looking after your mortgage application will have the experience, skills, and the ability to help make the process as seamless as possible for you?
Generally we seek the opinion and guidance from our friend, family and work colleagues to recommend someone that has looked after a client well in the past and has gained their trust. The face that they will use them in the future is a great honour, however to then feel confident enough to take the next steps and recommend their services is a major endorsement. This adds a level of tested trust and reliability to the process that makes the borrowers feel much more at ease.
Are mortgages just a transaction or are they more relationship based? They might be a transaction as such however I’m sure you wouldn’t have just anyone look after one of the largest transactions you will complete in your lifetime. I’d be very selective in the person I’d trust with this responsibility and provided you make the right choice that should be a relationship well worth having into the future!