On the 19th August, the Federal Treasurer Frydenberg announced the timeline for the implementation of the 2018 ‘Banking Royal Commission’ recommendations. He advised ‘’more than 50 of the 54 recommendations will have been implemented, or subject to legislation by the middle of next year. The full article by ABC’s Peter Ryan can be seen here via link.
The above article covered a critical issue in respect to home lending and brokers arranging finance for clients. That issue being that brokers must work in the client’s ‘Best Interest’ . This is pretty important with six out of every ten home loans each day being arranged through a broker. That number alone is testament that it’s working well for consumers! It’s worthwhile reminding the value that ‘brokers’ add to the process of home finance & why they are indeed already working in the client’s ‘Best Interest’:-
Brokers have access to better interest rates and discounts
Brokers offer you a wider choice of lending products
Brokers are industry experts who can match you with the best-fit loans for your situation
Brokers speed up the financing process by preparing and lodging your home loan application promptly
Now the above four points are the basics but it’s the knowledge & expertise that consumers seek out to make this process work well for them, and when it ‘falls off the rails’ that expertise greatly assists in the problem solving aspect. The value add for the client is wrapped up in the whole process . Who is the ‘go to person’ for lenders, accountants, solicitors , real estate agents & the consumers when action needs to occur ? It’s naturally the broker, because they act as the ‘hub’ for the client with all other stakeholders being the respective ‘spokes’ .
At COMPASS lending & finance we follow a set procedure to make sure we keep the forward motion for our clients , always looking to be proactive . We find the best results are achieved when the following is adopted:-
Educate the client at our initial interview about the ‘Mortgage Industry’ in a completely transparent manner. I addition to counselling them as to the likely time frames around the process.
Obtain a complete picture of the client via a ‘fact find’ supported by all information. There is nothing worse than having to return to a client more than twice for additional information.
Thoroughly explore the clients needs & objectives, enabling us to select suitable & not unsuitable loan products. We consider possible future events in this part of the discussion.
Identify weaknesses in the client’s proposal so that mitigant strategies can be adopted . This relates primarily around ‘credit assessment’.
Issue a report to the client with a selection of three to five good lending product options , after culling many possible options.
Agree with the client as to when , how & who to proceed with, re applying for finance. Although COMPASS makes recommendations, this is always a joint decision with the client.
Issue the appropriate application and consumer compliance forms , arranging a meeting to explain the documents prior to lodging the loan application.
Track the loan process with the lender using a ‘task reminder’ in case the milestones are not reached by the appropriate time frames. This is where we constantly keep the clients informed of progress, and also where we can action challenges that arise.
Following loan approval & issuing of formal documents , COMPASS advises clients to seek independent legal advice prior to executing them. However we always want to check them for errors.
After return of the executed loan offer documents , COMPASS monitors the progress towards settlement , and again addressing any issues or obstructions that occur along that path until it reaches it’s conclusion.
So in practice you can see that despite the new reformed legislation being adopted around working in the client’s ‘Best Interest’ , I am confident that COMPASS lending & finance, and the majority of brokers in the industry already follow best practice when it comes to this issue. We strive to get good outcomes for our clients.
You can contact Michael via phone 02 6583 2211 or email, admin@compassadvice.com.au and he will be happy to discuss your own personal lending needs.