Three brokers reveal what their clients understand about mortgages and how this is changing
Three brokers reveal what their clients understand about mortgages and how this is changing
Matthew Carr
Director
MC Mortgage Solutions
Our clients are struggling more than ever to keep up with the impacts of current regulatory changes on the cost of borrowing. I spend more time explaining the reasons for the regulatory changes and their impacts on interest rates; the pros and cons of P&I versus IO, and any interest rate loading that may apply as a result. With effectively four tiers of standard variable interest rates (PPOR P&I, INV P&I, PPOR IO and INV IO), our role now is to be that trusted adviser who finds our clients that perfect financial solution while educating them in this ever-changing financial landscape. Our services are in demand now more than ever. What a great time to be a broker.
Lloyd Thomas
Director
Direct Property Network
At DPN, we work with those who have mortgages as well as those looking to get into the property market. We’ve found that many people simply don’t have a strategy and are unaware of how to achieve their financial goals.
We show our clients what they will need for the retirement they want. Often, this is a big surprise as they simply had not thought about just how much will be enough, or think they are too young to worry about it.
We firmly believe in getting a strategy towards financial independence and helping our clients not only recognise what they need to do to reach their retirement goals but how they can access a tailored investment strategy to build wealth.
Stephanie Carello
Senior mortgage consultant
My Mortgage Freedom
The biggest gap in my clients’ knowledge is their lack of understanding and education on how banks assess their income and their borrowing capacity.
When borrowing potential is not as high as clients expect, I often find myself explaining the basics of lender assessment rates and why they need to allow buffers when it comes time to calculating maximum borrow.
When I chat to my FHBs, they generally don’t know the difference between having a good deposit and what the bank will allow them to borrow. With easy access to servicing calculators and mortgage repayment calculators online, I find it tends to give the client a false sense of knowledge.
A recent ME survey found that a risky combo of high confidence and low financial literacy among Australian borrowers could be costing them thousands. “Seventy-four per cent had no clue about home loan comparison rates,” says ME head of deposits and transactional banking Nic Emery, “meaning they may not be aware of the fees they are paying; while 61% mistakenly believe they’d lose money if their bank went under despite the government guarantee, which means they may be ignoring higher deposit rates at smaller banks.” Furthermore, 36% of respondents didn’t realise that the shorter the loan term the less interest is paid, and 35% admitted they had taken no steps to educate themselves on banking products and services.
