Hey there mortgage seekers and first home buyers Gold Coast! Are you tired of scrolling through endless Google search results and feeling overwhelmed by the mortgage process?
Have you considered reaching out to a mortgage broker for help with Gold Coast home loans, but are hesitant to trust them to act in your best interest?
Well mate, it’s time to take a deep breath and relax. In this blog we will dive into the world of mortgage brokers and this nifty little thing called Best Interests Duty.
BOOK AN APPOINTMENT WITH PHILWhat do mortgage brokers do?
A mortgage broker Gold Coast is a professional who act as intermediaries between borrowers and lenders. They work with a wide network of lenders, including banks, credit unions, and other financial institutions, to offer a variety of mortgage options to their clients.
Here’s what mortgage brokers typically do:
- assess their clients’ financial situation, including their income, assets, debts, and credit history, to determine how much they can afford to borrow and what type of mortgage would best suit their needs.
- present a range of mortgage options from different lenders to you based on your financial profile
- prepare and submit loan applications to the chosen lender on their behalf
- negotiate with lenders on behalf of their clients to secure the best possible mortgage terms and interest rate
- continue to provide support and guidance to their clients by helping them with any questions or issues that arise during the loan repayment period.
What is Best Interests Duty and how does it help me as a borrower?
It is essential for clients to have trust in their mortgage broker when navigating one of the largest financial commitments of their lives. To give them greater security and assurance during this process, the Australian Securities and Exchange Commission (ASIC) introduced the Best Interests Duty (BID).
Best Interests Duty is a statutory obligation that was implemented based on the recommendations of the Royal Commission. It mandates all mortgage brokers to act in the best interests of consumers and prioritise the consumers’ interests when providing credit assistance.
ASIC formally introduced this new legislation on 1 January 2021. Ultimately, it aims to align the consumer’s expectations and interests with those of the mortgage broker’s.
When does best interest duty apply?
While it may seem obvious what a client’s best interests are, there could be instances where a client’s objectives contradict them.
Here are some examples:
- client is insistent upon an interest-only loan or an offset account despite not being in a position to get much value from those features;
- client doesn’t want to entertain any products from, say, a credit union or one of the big four banks, which rules out some excellent products which would suit their personal situation.
The Best Interests Duty provides additional assurance for consumers seeking advice from mortgage brokers. Under this new regulation, the broker must:
- explain why these requests are not in the best interests of their clients
- make “all reasonable efforts” to educate clients about different borrowing option
- help them understand why certain solutions may be more beneficial
- have systems and processes in place that empower customers to make informed decisions about their mortgages
- provide clear information on fees and charges associated with different products and services as well as outlining the pros and cons of each option
At its core, the Best Interest Duty provide protection for consumers who may otherwise be vulnerable to bad advice or misaligned incentives.
Mortgage broker vs bank: does the Best Interests Duty apply to banks and lenders?
You would be surprised to know that NO, it does not!
Banks and other financial institutions do not have to adhere to this duty when providing credit assistance. This means that when you approach banks directly for credit, you are not always guaranteed the best options available.
You will only be presented with one set of options – generally those available at that particular lender – as they only offer their own products. This means no comparison can be made between different lenders or products.
Are mortgage brokers worth it?
YES, a hundred percent, mate. Bound by best interest duty mortgage brokers are held to a high standard of trust and accountability when advising consumers.
If you’re looking for a trustworthy mortgage broker to work with, look no further than Professional Lending Solutions. My team collectively has decades of experience helping hundreds of clients get the right lending solutions for their circumstances. With this, I can confidently assure you that my team and I will ALWAYS act in your best interests.
Trust Professional Lending Solutions with your property purchase journey — and make sure to give me a call!
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Phil’s journey from banking to mortgage brokering reflects a career driven by a commitment to personalised service and tailored financial solutions. With a distinguished background in banking, including roles at NAB, ANZ and Lloyds TSB Bank in the UK, Phil spent 12 years developing expertise in personal and commercial finance, while also completing a Bachelor of Business (Finance), followed by an MBA majoring in International Business.