The need for Mortgage Brokers

Mortgage Brokers, home loans, competition

The Banking royal commission and the outcome for Mortgage Brokers

There are a lot of opinions out there regarding Mortgage Brokers  and the outcome from the Banking royal commission.  This is my personal opinion and how this will affect me as a Mortgage Broker and my clients.

There are 3 main items that came out of the Commission:

  1. Mortgage Brokers are to act in the best interest of the client and not seek out loans for clients that favour their financial gain (ie: using banks that pay higher commissions); – I do agree with this and that there are some brokers that may be in the industry to make as much as they can and not be looking after the best interests of the client.
  2. Trailing commissions are to cease from July 2020 for new loans written;
  3. Upfront commission payments are under question and in 2-3 years they could look at changing to a fee for service model where the client pays.  Why would a client pay to use a broker when they can go to the bank for free? 

What I do as a Mortgage Broker?

Aside from assisting clients through the process of buying or refinancing, I find the best deal for the client.  Based on their circumstances, certain lenders will be more suited to them.  And having a number of options is a very good thing.

When the Commissioner asked the CBA  boss “are there any ongoing services supplied by a mortgage broker that warrant them being paid trailing commissions”.  His response…”No, they are being paid money for nothing”.

As a Mortgage Broker, I service my clients and any of their requirements they need throughout the year.  Do I get paid for this? NO.  I work with clients throughout the year to get them to a place where they can buy property.  Do I get paid for this? NO.   When the clients expiry dates come up and if it is beneficial for them to stay with their current bank and I renegotiate a better rate, rather than refinance.  Do I get paid for this? NO

If I get a loan in place for a client and their circumstances change where they need to sell a property or decide to pay their loan out within the first 2 years, we are required to pay back commissions that have been paid.  So. essentially I work for free.

Mortgage Brokers can do a lot of work with clients on loans with advice on what they need to do to have the best chance of getting a loan approval.  They may decide to go to the bank directly or not proceed at all.  Again, I am working for free.

I do not get paid on anything until a settlement goes through and some deals can take months.  In what other industry can this amount of work be undertaken with no payment?  I’m pretty sure the big bank bosses will NEVER work for free and have their huge executive salaries to fall back on.

What this all means…

So, as Mortgage Brokers we currently get paid by commissions by the banks.  These do not affect you, the client in any way.  It does not increase your loans costs OR interest rates.

If these commissions are cut, what will this do?  It will increased banks already substantial profits and will decrease competition within the market.  This could result in increased interest rates and the big banks will get the higher market share.

Did you know that there are 20+ financial institutions out there that you can get finance from?  A lot of these do not have a branch network which means less overheads.  Because of this they are able to provide lower interest rates.

The Mortgage Broking Industry allows for “healthy” competition with the banks.  Without this it could also be detrimental to some financial institutions that receive up to 80% of their business from the broker network.  Again, reducing competition.

Throughout the RC the big four banks have been bought into question regarding their unconscionable behaviour and conduct.  How can they then point the finger at Brokers and say that we are not working in the best interest of the clients.

I have and always will work in the best interests of my clients.  Having been in the industry for over 20 years I have seen a lot of competitive behaviour from the banks…. and again it would seem as though they have won.  But, we won’t go down without a fight and will continue to hold out heads high as we make a difference in this industry.

Boom turns to bust for Brokers

Banking royal commission and what it means for you

If you don’t know what a Mortgage Broker can do for you, please feel free to contact me for a chat.   Alternatively if you have a current home loan and want to see if YOUR bank is looking after you – I would be happy to provide and obligation FREE consultation.

Choice Matters – Pledge your support

Angie Kayser – Finance Broker – 0468 513 135

angie@wealthconnectfin.com.au

 

Happy New Year…. achieving your goals

New Year

What are your New Year resolutions?

New Year resolutions…..  Some are new, some are re-occurring and some we know will only last a couple of months.

Setting up your New Year resolutions for your finances though only needs to be done once a year and may need a little monthly commitment.  You can do this by setting up a budget to help you get to a goal.   It can also be just to clean up your finances making things easier to manage.

Is one of your New Year resolutions to get into your own home…  Do you know what your borrowing capacity is?  How much deposit do you need?  What is required to start the process?

Want to consolidate your debt so it is easier to manage?  This can be combining credit cards and personal loans into your home loan.  As a result of this it can lower your monthly payments and give you more cash flow.  With the additional cash you can put it towards paying down your loan or towards one of your other goals.

Do you want to start your New Year with investing in property? Again, do you know what is required with deposits, costs, etc.

A Mortgage Broker can help with all of this information to guide you through the process of what you need to get into the property market or help assist with debt consolidation.

It is also a good idea to speak to a Financial Adviser as they will be able to look at your overall situation, where you want to be and put a plan in place to help you get there.

A Financial Planner and Mortgage Broker work hand in hand as the Financial Planner is able to give you the best advice of what loan structure is best suited to you situation.

Contact me today to start the process and achieve your New Year resolutions.

 

Separation of Property

separation, divorce, property buyout, property settlement

When it all goes bad……

Lets face it, not everything turns out as we had planned and lives get messy.  You start out all loved up, go about your everyday lives, happy times, bad times, stresses and celebrations.  Years or even decades later what happens when everything starts to unravel? You decide to go your separate ways….  You have shared a life together and now you need to split that life up.  What happens next?  A separation of property is something you may need to consider.

Where possible…… take the emotion out of it!!

With the separation of property you will always need to get independent legal advice.  You may also need to speak to a finance specialist.

One person may want to buy the other out of the property.  They will need to find out if they are able to afford it by themselves.  They can also find out what the maximum is that they are able to obtain.

A Broker will be able to let you know what you are able to afford and can start a pre-approval process.  Once you know how much you can afford you will need to speak to a solicitor to work out the next steps.

You will need to get in place a Binding Financial Agreement OR Consent Orders which need to be stamped by the Family Court.  A Solicitor will be able to advise which option is the best for you.  The bank will need to see a copy of this to confirm what has been agreed to regarding the property.  This document will also outline any other details for additional payments and property to be split.

Keep in mind, this is not a quick process and you will need to allow a couple of months for agreements and funds to be finalised.

This can be a stressful time and speaking to a specialist that is able to guide you through the process can be a big help.  If you are in this situation or know someone that is please contact me for a discussion to see if I am able to assist.

Angie Kayser-Finance Broker   | angie@wealthconnectfin.com.au   |  0468 513 135

Bridging Finance – what I need to know

Bridging finance

What is Bridging Finance?

Bridging finance is when you purchase a new property before you have sold your existing one.  It is only available on Owner Occupied property.

Like anything there are some requirements that you would need to meet.  Your existing property needs to be on the market; Lenders will capitalise 3-6 months of interest into the loan during the bridging period; You need to have sufficient equity in your property – equivalent to 20% deposit; Once sold the net sale proceeds will be paid towards the bridging loan.  The remaining balance is referred to as the “end debt” and this is the loan you will be left with and make your normal monthly payments on.

An example may be:

New property purchase $500,000 (property value) + Purchase costs $20,000 + Existing loan $200,000 = Total amount of finance required $720,000.

The existing property sells and there are net sales proceeds of $350,000.  This amount is applied to the loan and the balance is then reduced to $370,000.  This is the amount that the customer will make monthly payments on.

The benefits of bridging finance is that you will not have a gap where you have sold your place and are looking for a new one.  Ordinarily you may have needed to rent somewhere during this period.  You only need to move once.

With the Bridging Loan calculations the banks take into consideration the purchase costs on the new property as well, which means these are financed.

Not all Banks offer these types of loans though and each Banks requirements do differ slightly.

Is this something that you are considering?  Contact me to see if you qualify and what the requirements are.

Angie Kayser – Finance Broker – Wealth Connect Finance

0468 513 135 – angie@wealthconnectfin.com.au

Happy New Financial Year!!

new year, finance, home loans

What are your new financial year resolutions?

Like any year new year we make resolutions for our personal goals that we want to achieve in the coming year.  Have you considered what financial goals would you like to achieve?

Do you want to look at reducing your tax?  Buying an investment property buying your own property?  Selling your property? Starting a business?

A lot has been happening over the last couple of months with the Royal Commission and what banks have not been doing right by their clients.

Do you know you that here are so many more lenders out there outside of the big 4 that have lower more competitive rates?  Just to name a few…  Adelaide bank, ING, Macquarie, Bank West, Auswide, Members Equity, Advantedge, as well as industry specific lenders for police, fire fighters, teachers.

This is where a broker can come in.  They have access to these lenders and will be able to look at your situation and advise which lender would be the best fit for you.

When I look at options for my clients I will always recommend a mix of lenders that include a major bank.  Why include a major?  So you are able to see the difference in costs.  However, some people prefer to use a major bank as they think they are more reputable and that’s fine.  I will work with them and get the best rate possible.

Do you have an idea about what you might want to do, but not are sure how to do it? Speak to a broker and they may be able to come up with some different suggestions. 

Bank have been tightening their lending criteria lately which affects everyone.  This means a lender you may have fit with 6 months ago may no longer be on the list for you.  There are a number of factors that come into consideration for this.

Think you have an idea of what you want to do this year but not sure where to start?

Contact me for a free chat…..

Angie Kayser – Finance Broker

Email me or call 0468 513 135

Want to save money? Review your Home Loan

Review your home loan every 3-4 years

What do banks love?  Customers who do not review their home loan.  Those that get their loan and let it run along for 5 or 10 years without doing anything.  They love you!!  Why? Because it means that they do not need to offer you anything to keep your business.  Also, because your loan has been with them for a while your interest rate would have slowly been creeping up as well.

Banks usually have their best offers for new to bank customers.  You may have been with your bank for a few years on a rate of 4.35% but have the option to look at another bank at 3.90%.  On a loan amount of $500,000 this is a saving of $2,500 per year.  Over 4 years this is a saving of $10,000 – what else could this go towards?

A Broker is able to provide you with some options with what you could save if you were to refinance your loan.

Yes, it may be a little annoying with the paperwork, no-one likes that.  Depending on the bank, there may not be too much information that is required.  Provide your broker with a bit of information and let them get to work on saving you money.

If you have a car you have it serviced to make sure it runs efficiently.  So, why would you not do the same with your finances.  You could save on your home loan and use that money to reduce other debt.  Or even save to go on that holiday or do something for yourself that you have been wanting.

Have you had your home loan now for 4 years or more?  Contact me to see if I can save you some money.

Wealth Connect Finance

0468 513 135

angie@wealthconnectfin.com.au

Clean out the Clutter…..

It is that time of year to clean out the clutter and get ready for Spring.

Not only is Spring a good time to clean of your home of clutter, but your finances as well and get rid of anything that is no longer of use to you.  It is also the busiest time for people to buy property.

Like anything, we tend to get comfortable and just let things be.  Have you noticed that when you move house, how much you actually throw out?  This is ‘stuff’ you have accumulated over time without even noticing.

While we can’t really accumulate finances without noticing, certain things can happen which can be like clutter.  Your home loan and finances should be reviewed every 2-3 years because our lives change and finances should change with it.

Say you bought your first home 3 years ago with a minimal deposit and the rate is not great.  What has changed in 3 years?  New Job or promotion?  Do you have children and thinking of expanding your family?  Have you outgrown your home?  Have you accumulated that small annoying debt like credit cards?  If the answer is YES to any of these it may be time to re-asses things.

What your Broker can do is look at everything that you owe and speak to you about what you want to do.   Do you want to move house?  Can you keep your existing house as an investment and buy another to live in? Are you happy where you are but want to clean up your debt?

Your broker will be able to provide you with some options with what to look at in terms of your assets and creating wealth.  But also look at restructuring and financing your current loan with another lender that me be more suitable to you now.

Contact me now to discuss your options.

Angie Kayser – 0468 513 135

angie@wealthconnectfin.com.au

 

Investment Lending

The changing face of Investment Lending and what it means for you.

Go back a couple of years Investment lending it was so easy.  There was 1 variable interest rate regardless of what the purpose of your purchase was and what kind of repayments you wanted.  When looking at investments the customer would usually borrow as much as you could and make interest only payments as it was all tax deductable.

Fast forward to now and there are so many factors that come into play to determine what you can borrow and how much it is going to cost.  APRA, being the regulation authority that overseas the banks as well as Insurance and Superannuation industries is the one that enforces these regulations.

APRA had come out a few months ago stating that Banks has too many Investment and Interest Only loans on their books and they needed to be bought back down.  How did they do this?  Some banks no longer accepted investment refinance applications, they increased the interest rates and increased deposits that were required.

Looking at the traditional way of lending where you borrow with as little as a 10% deposit and Interest Only payments and could get the same rate as an owner occupied property is no more.  To qualify with most lenders on I/O payments customers now need to have a 20% deposit.  There will still pay a higher rate but it is higher still with I/O repayments.

With existing customers that were on high lends with I/O payments now paying much higher rates banks are starting to see these resulting in mortgage stress with people not being able to make the higher repayments.

Confused with it all?  Welcome to the new world of the Mortgage Broker.  Each lender has changed their requirements in different ways and if you are one of those that is seeing your interest rate increase dramatically it may be time to speak to someone.  As the borrower you need to consider your best options.

Loyalty with banks does not exist any more.  They are not going to give you great rate discounts just because you have had your accounts with them for 20 years.  If you speak to your bank they will be able to give you limited advice as they will only be able to give you advice on what they are able to offer.  Speak to a Broker as they have up to 30 different lenders that they are able to utilise that may be a better fit for your current situation.

The changes in rates for I/O payments have also moved across into the owner occupied space, however it is the Investment Lending that has seen the most change over the last few months.

Want to find out what options you do have out there?  Contact me to discuss what we can do.

 

Design Your Life – are you living the life that you designed

Do you have the life you want?  The life that you saw for yourself? What have you done to Design Your Life?

Like building (designing) a house you have plans drawn up so you know how many rooms there will be, how the house will be planned, how big it needs to be for you.   What have you done to Design Your Life?  Do you have your plans drawn up or are you just going through life seeing what will happen? Are you adjusting as you go and then get to the point where you are not where you thought you would be?  Instead of the 5 bedroom house with the manicured lawn and pool you have a 3 bedroom, 1 bath where you seem to always run out of room and your lawn has weeds popping up everywhere and you become reactive by pulling them out or dealing with things as they happen rather than proactive.  Thinking about how to get where you want to be and what you need to do to get there.  Put plans in place to get you where you want to be.

Looking at getting into your first home but don’t think it is possible or just don’t know how to do it.  Speaking to a Mortgage Broker or Financial Planner could be the first step in designing that part of your life.  They can give you a plan to start you off and help you through the process.

You already have your home but have credit cards and personal loans that you are also trying to juggle and it feels as though you are never going to get in front?  Again this is where a Broker can help with a plan.  They can look at restructuring your finances to clean up the bad debt.

Sick of working 50-60 hours a week (or more) and not getting out of it what  you thought you would?  What do you have to do to improve your situation?

Sometimes everyday life/stresses take over and we lose sight of what we wanted / how we wanted out life to be.  We all have the things we enjoy that also help clear our minds and refocus on us… playing a round of golf, being at the beach, hiking in nature. For me it is escaping my everyday and going somewhere that I do not have the everyday distractions.  Typically that will be a small trip overseas.  To be able to wake up without everything I think i need to do around me, spend time on the beach at the pool and walking around the island.  It makes you realise what you want and how to get back on track.

Take a step back, make a plan, get yourself back on track for where you want to be.  Speak to your broker about your finances – this may be the first step to get you back on track.

Wealth Connect Finance

angie@wealthconnectfin.com.au

0468 513 135

Buy, Sell, Rent, Keep? I don’t know what I want….

 

Thinking of buying again,but not quite sure what you want to do?  Should you buy, sell, rent, keep?

You know you want to do something but not sure what, sit down with your Finance Broker, tell them what your short and long term goals are and they will be able to come up with some suggestions for you.

In your mind you may want to buy a new property to live in and rent your existing one out.  This may very well be an option, but will it be best for what you want to achieve.  You want to get a new property with a larger land size to build a shed to run a business out of.

Your Broker can sit down and go over the options for you.  Yes, the above is possible but your equity will be restricted and you may have to save up be to able to put the shed on the property.  They can also give you another option where you look at selling your existing property and using the sale proceeds as a part deposit for the new property and remaining funds to complete anything extra that you want done on the property.

Sometimes it is all about options.  That is what your Broker is there to do…. provide you with options and information so that you can make an informed decision of what the best option is for you, at that time.

When we go into looking at a new property we can be very focused on what we want and may think that it may not be possible.  That is where someone outside of the decision making process can offer other insights and options that you may not have originally thought.

What to do something but not sure what?  Sit down with your broker and work out a plan.  It may be a long term or short term plan but at least then you have a plan in place to achieve where you want to be.

Contact me if this is you and you are not sure if you want to buy, sell, rent, or keep….

angie@wealthconnectfin.com.au

Ph: 0468 513 135

Wealth Connect Finance