Do you know someone who has recently gotten bank approval for a mortgage loan? If so, there’s a good chance they got it through a Mortgage Advisor. With so many lenders on the market (all with vastly different lending requirements), it’s an attractive option to get a go-between to assist you. But can you trust your Mortgage Advisor, and who is paying them?
If you’re hesitant about consulting a Mortgage Advisor, we don’t blame you. With the ASIC (Australian Securities and Investments Commission) recently deciding to review the lending practices of the local Mortgage Industry, a little apprehension is only natural.
You probably already know the basics of how Mortgage Advisors get paid. They get an upfront commission from banks when a customer takes out a product they’ve recommended, earning them roughly 0.7% of the loan amount).
Less people are aware however that these Advisors can also get an ongoing commission for every year taken to pay off the loan. Many unscrupulous Advisors are recommending products that will take the borrower more time to pay off – generating them more money over time.
The good news is that you don’t need to have a degree or experience in the housing market to check if your Mortgage Advisor is taking you for a spin.
Firstly, a quality Mortgage Advisor should be able to offer you a range of finance options to choose from.
Secondly, they should never pressure you into taking a certain product – if you ask for a second opinion from another Advisor, Broker or Financial Specialist, a good Advisor will encourage this and not push you into making a rushed decision.
Finally, a good Advisor should be able to offer you choices that not only legally comply with your requirements, but that are the best deal you could get.
Your relationship with a Mortgage Advisor has potential to be great – it’s one where you get the best possible mortgage product for your needs, with them benefiting from making the right recommendation. But like with any relationship, it’s all about trust and being able to ask questions. After all, this is an investment you will sit with for the next few decades of your life.