Last updated on 17th February 2019

Why are borrowers leaving the banks for boutique lenders?

After the Royal Commission put the big 4 banks under the spotlight, the Australian Prudential Regulation Authority (APRA) tightened up lending standards in order to slow credit growth. This has made it harder for people to secure a loan with the major banks and pushed many borrowers towards a smaller or a non-bank lender.

Another recent report, this one from Momentum Intelligence, showed that the majority (84%) of people who used a broker were “very satisfied” with their last experience. In total, 96.3% reported that they were satisfied after using a mortgage broker. That’s compared with only 25.8% of those who went direct to a lender[2].

What these numbers show is that during a period of severe credit tightening, brokers are successfully providing critical assistance to would-be borrowers and delivering a positive customer experience.

What are the advantages of using a mortgage broker?

Access to exclusive products

Your mortgage broker is your home loan industry insider. They can provide you with access to a wide-ranging network that provides you with plenty of choice, amongst both lenders and mortgage products. When you have the inside track, you can often find a better deal than you might be able to get on your own.

Brokers can also use provide you with access to exclusive home loan products that may be better than those on the open market. One such product is the Connective Home Loan Essentials Variable loan from Advantage. Advantage are a non-bank lender and offer this product with no annual or monthly fees.

Streamlined application process

The application process for a home loan can be quick if you’ve got a straightforward financial background. But, if like many potential borrowers, you’ve got a few special circumstances the application process can drag on.

A broker knows exactly what the lenders are looking for when they’re deciding whether or not to approve you for a loan. They can also identify any missing supporting documents before you submit your application.

This critical information can help to make your application as strong as possible and save you a huge amount of time by eliminating some of the back-and-forth with the lenders.

Navigate complicated terminology

Not sure what an offset account is? Or maybe you’re not exactly clear on how a guarantor can help you? That’s where your broker can offer clarification.

They can explain complicated terminology in a way that is easy to understand, so you know what you’re signing up for. It’s the kind of information you need to make a decision about which home loan is best for you.

An advocate in your corner

A mortgage broker can negotiate with lenders on your behalf to get the best possible loan terms. As they work your application, they’ll find out what’s most important to you and do their best to get it for you.

A good broker isn’t trying to ‘sell’ you a home loan; they’re trying to help you find a loan that suits your financial situation and offers you the terms you want. That includes features such as low rates and offset accounts, as well as your ability to service the loan and whether it will leave you in a better position in the long run.

If you have to go up to bat for yourself against a lender, it can be challenging to even know how to ask these crucial questions. Your average borrower doesn’t have the wealth of knowledge to provide much-needed leverage in negotiations. Backed by industry expertise and experience, that’s where your broker can step in.

One point of contact

Have you ever had to contact customer service for a company, only to get a different representative every time? Then you know how frustrating it can be. A broker is your single point of contact. You’re working with someone who knows your situation, so there’s no need to explain yourself every time you pick up the phone!

Service with no upfront fee

Mortgage brokers do not charge a fee for service. Comparing what’s on offer from the lenders and assisting you with securing credit is all provided, free of charge. Brokers are instead remunerated on a commission structure from the lender.

Help from start to finish

Many people don’t realise that a broker is there to help you throughout the life of your mortgage, not just through settlement. If you have questions after closing, or if you’re interested in refinancing at some stage, your broker will still be available to help.

A broker by your side

What is perhaps most compelling about the Momentum Intelligence report is that 95.8% of the borrowers they surveyed who used a broker would do so again. Yet only 31.4% of customers who took out their loan directly with a lender would do so again.

In fact, over 63% of the direct-to-lender group said that next time, they would use a broker for their mortgage.

This list showcases just some of the reasons Australians see such value in utilising a qualified mortgage broker to help them secure a home loan.

Whether you’re refinancing, looking to purchase an investment property or your first home, a broker can introduce you to a world of options you didn’t even know existed and save you a lot of money along the way.

Contact Rate Comparison today to connect with a broker who can get you started.

This article is opinion only and should not be taken as financial advice. Check with a financial professional before making any decisions.