bank lending

How much do Mortgage Advisers get Paid?

Let’s peel back the curtain to see what’s really going on inside your favourite mortgage brokerage: How do we get paid? How much do we get paid? Why do we recommend one bank over another?

 

We have hit the headlines this week. Banks, insurance companies and advisers (i.e. us) are in the spotlight in Australia and NZ. One of the issues raised was how and how much we get paid. It is fair to say there are some interesting conversations going on in our world at the moment.

 

At Velocity we pride ourselves in doing the best possible job for you and giving you advice that is best for you. Apparently that isn't that common in financial services.

 

We currently get paid a commission from the banks and insurance companies with whom we place your business.

 

When we first meet you, we disclose how much all our providers pay us, even though there is no obligation for us to do so. Yes, each provider pays us slightly differently, so all we can do is explain that. It is also up to us to give you solid reasons why we recommend each product and company we use. 

 

We've just done a quick tally up and below you’ll see the percentages of business we have placed at all the home loan lenders we use (based on numbers of new settlements).

 

As you can see, it is "horses for courses". We don't have favourites. All the banks have their place and all our clients are different.

 

We try hard to operate with maximum transparency. Always feel free to ask us to justify our recommendations, as we want you to have confidence that we are doing a good job and working in your interest.

 

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ANZ: 34%

BNZ: 16%

ASB: 15%

Sovereign Home Loans: 12%

Westpac: 11%

TSB: 2%

The Cooperative Bank: 1%

Non-Bank Lenders (Avanti, Liberty, BlueStone, Resimac): 9%

 

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

When it comes time to re-fix: The dos and don'ts

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When you get that email from the bank saying your home loan is due to for re-fixing, do you A) just hit the “yes” button, or B) take the opportunity to reassess in order to strike the best deal?

Re-fixing provides an excellent reason for reassessing where your personal finances are at, taking in the changes in the banking industry and adjusting your plan and home loan structure to suit.

 

So, here are some quick pointers to keep in mind for when you get that re-fix email:

 

Do … see the re-fix email as a chance to reassess your financial situation and survey the financial landscape.

 

Don't … just hit the button on the banks’ email or internet banking message without talking to a trusted financial adviser (of which, we can help!).

 

Do … use the automated calculators the banks provide—they’re very useful tools and help to make things simple. But they do have their limitations …

 

Don’t … just rely on these calculators as they often miss the individual nuances of people’s hugely varied financial and life situations. After working with literally 100s of home owners over the years, we know that everyone can benefit from a tailored and personalised strategy. There may come a day when technology can handle all these nuances, but until then we are here to help.

 

Do … get someone else to do the donkey work. Re-fixing at the click of a button is obviously less stress than researching the market and negotiating afresh with the bank, but the good news is that you don’t have to do that donkey work—we do it for you! 

 

So, the message from us ...  give us a bell before click the “yes” button on re-fixing. Let’s get you locked in to your best possible mortgage.

 

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

 

Two Big Shifts in Banks’ Lending

We’ve talked recently about how the banks are tightening the screws of their lending. Here are two recent changes that are creating increasing challenges for borrowers:

 

BANKS ARE CHECKING THE SMALL STUFF

More than ever, banks are going through our applications with a fine-tooth comb. They want to make sure that full-expense budgets have been completed and that these align with bank statements. As an example, we have had deals declined because of two or three unarranged overdraft fees on bank statements.

 

On a similar note, banks want confirmation of where your deposit has come from. So having $30,000 show up in one lump sum into a bank account will raise some questions. The origin of these funds needs to be verified. This has always been the case but our observation is that banks are becoming more particular about these smaller points at the moment.

 

IF IT’S NOT PLAIN VANILLA, THEY’RE NOT INTERESTED

There is no real appetite from banks to do deals that are outside the ordinary—they’re passing up Goody Goody Gum Drops in favour of boring old vanilla.

 

Within banks right now, it seems the credit department is winning over the sales department. They are more concerned about protection and bracing themselves for the uncertainty of the future rather than growing their customers numbers.

 

So, if you are a standard customer with a 20 per cent saved deposit on a good PAYE income, certainly there is no problem getting money. However, if your income is variable, if you are new to business or if the house is out of the ordinary, there are more questions and more challenges being raised by the banks.

 

As always, we will keep you posted with the latest changes. It is our job to stay on top of what the banks are doing so that we are able to provide the best possible advise and mortgage solutions for our clients.

 

Don't hesitate to run your scenario past us if that would be helpful

 

 

Brendon Ojala is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.