What The Banks Can’t Offer – But We Can!

What a difference a year makes. After the turmoil of lockdowns
and employment uncertainty around this time last year, things are
looking up for many of our clients – in more ways than one!
26% of Australians say their families are now ‘better off’ financially
than this time last year and some recent auction clearance results
are nearly 90%.

We suspect we will continue to experience a level of uncertainty
as borders and restrictions ease and then tighten again, however
many of our clients are taking advantage of the current
opportunities to buy their first home, invest or upgrade. These
are the key reasons that you could too…

• First home buyer incentives, discounts, cashbacks and
concessions are available

• Interest rates remain at an all-time low

• Consumer confidence is lifting

• Simpler lending rules for home loans are expected shortly

For many Australians who are considering taking advantage of
the current opportunities to secure a home loan at the lowest
rates in history, the choices and process itself can be a little
daunting.

If you don’t have a good understanding of the financial services
industry or the many products and features available for home
loans, it can be difficult to decide on the right property finance
for you. Plus, mortgage applications can sometimes be confusing
and time consuming. But not for those using a mortgage broker.

It’s all about your best interests – one more reason to
use a mortgage broker.

The Best Interest Duty (BID) for mortgage brokers came into
effect on 1 January 20213.

The Best Interest Duty and related obligations ensure that you
receive advice that meets your objectives, financial situation and
needs, and that we act in your best interests when providing
advice.

This new duty gives you additional peace of mind knowing that
we are now legally required to act in your best interests.
Did you know that Best Interest Duty does NOT apply to any
banks or other lenders?

ASIC, the industry regulator, released Regulatory Guide 273
which sets out obligations for mortgage brokers under the Best
Interest Duty.

The Best Interest Duty obligations:

• are intended to more closely align mortgage broker practices
with consumers’ expectations

• should improve the support, guidance and communication
provided to consumers throughout the credit assistance
process

• should lead to a higher quality of credit assistance being
provided

The new obligations include a duty for mortgage brokers to
prioritise the interests of clients over their own – which we have
always done anyway!

Products recommended by us must be in your best interests
and the reasons for product selection should be recorded and
explained to you.
While costs (interest rates, fees and charges) are often a major
determining factor when deciding on a home loan, the cheapest
may not always be the best outcome for the borrower.

ASIC’s BID guidelines state that some consumer
circumstances will mean that the benefits provided by certain
features may outweigh the importance of cost.

While some people may value access to an offset account,
others may prioritise faster approval time. Mortgage brokers are
expected to exercise judgement in considering the relevance
of these factors with reference to the consumer’s individual
circumstances.

Regardless of legislation, how could a bank or other lender always
‘act in your best interest’, if they can only offer you a limited
number of products?

The ANSWER is… They can’t!

A lender may offer you products, but a mortgage
broker MUST act in your best interest.

We have always sought finance options for our clients that best
suit their own individual circumstances and work in their best
interests, so don’t expect anything to change from us. We will
keep focusing on doing the right thing by our clients.

Not only are market conditions and interest rates tempting
our clients to buy, but there is now the added confidence that,
amongst the other benefits of using a mortgage broker, we
are legally obliged to offer finance options that are in your best
interests.

To find out how you could secure a better mortgage deal that
MUST be in your best interest – read our guide here.