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Mortgage Broker or Your Bank? Exploring the value of brokers in 2023

While I was due to write another blog this week, I stumbled across a bit of a debate online where the integrity and value of mortgage brokers in general was challenged, with a few people adamant that all homeowners would be better off going directly to their bank. While the overwhelming majority of Australians (69%+ as of last quarter) do now choose a mortgage broker to handle their home finance, I thought it might be worth diving into exactly WHY this is the case, and explore a little bit more about how the value of mortgage brokers has continued to grow as we enter the second half of 2023!

1. Access to a Wide Range of Products and Lenders:

One of the most obvious (and largest) advantages of using a mortgage broker is their extensive access to a wide range of products and lenders. Unlike banks, brokers can provide you with a comprehensive overview of various loan options tailored to your specific needs. This allows you to explore competitive interest rates, loan features, and repayment options that may not be available through your bank alone. A bank 'home loan specialist' doesn't have access to this and is purely incentivised to sell their own products, which is just about the opposite of the impartialness that people are usually looking for when it comes to their home loans.

2. Best Interest Duties:

Mortgage brokers are bound by their Best Interest Duties (BID) to their customers. This means they are legally obligated to act in your best interest, ensuring they provide suitable loan recommendations based on your financial circumstances and goals. This duty ensures that brokers prioritise your needs over any potential commission they may receive, giving you peace of mind that they are acting purely with your best interests at heart. Unfortunately bank employees aren't bound by these same duties.

3. Zero Cost to Clients:

Contrary to popular belief, mortgage brokers generally don't charge their clients for their services. They are remunerated by the lenders, which here in Australia is done in the form of commissions. This means you can benefit from the expertise and guidance of a broker without incurring any additional costs. In fact, in our loan proposal documents we provide you, there will be a full and transparent breakdown of our full remuneration should you choose to utilise our services in arranging your home loan!

4. Personalised Service and Relationship Building:

When you choose a mortgage broker, you're not just another number. Brokers value their customers and strive to build long-term relationships. They take the time to understand your unique financial situation, goals, and aspirations, allowing them to create personalised solutions that align with your needs. This personalised approach sets brokers apart from banks, who often lack the same level of personal attention. Additionally, a mortgage broker's job extends beyond loan settlement. We will continue to support you throughout the life of your loan, offering valuable advice on refinancing options, reviewing your loan structure, and assisting with any inquiries you may have. This ongoing support ensures that you have a trusted professional by your side, even after the initial transaction is complete. Just think back to past dealings with your bank - how often have you ever had a dedicated person assigned to your loan or account? I know I haven't ever had one in the nearly 30 years I have been banking in Western Australia!

5. Comparable Remuneration from Banks:

Contrary to the misconception that brokers may push certain lenders for higher commissions, banks remunerate brokers relatively similarly to one another. This ensures that brokers are incentivised to find the most suitable loan for you rather than focusing solely on financial gains. This also ties in well with point 2 as a broker's Best Interest Duty (BID) also strictly regulates and monitors this.

6. Access to Advanced Technology and Software:

Mortgage brokers have embraced technology, giving them access to a growing wealth of tools and software. These resources enable brokers to streamline the loan application process, compare multiple lenders efficiently, and ensure a smooth experience for their clients. Leveraging technology allows brokers to provide you with up-to-date information and efficient service throughout the loan process. Here at Neptune Finance Australia, we are constantly striving to better the service we provide our clients and as such, are always looking for new tools and technologies that can help us achieve those goals.

7. A Bank Won't Offer A "Better Deal" in Lieu of a Broker's Commission:

A mortgage broker delivers a great amount of value to their clients, but they also are a valuable asset to the banks too. As I mentioned earlier, brokers write nearly 70% of loans in Australia, which is current as of July 2023. Should brokers suddenly stop writing loans, a bank's costs would skyrocket! Staffing, training, marketing and many more overheads would begin to increase, which would effectively nullify any commissions they would have to pay brokers. In fact, there are cases where brokers can actually help negotiate a better rate for you than you would get going direct to your bank. This may be more likely for borrowers who are refinancing and have a good credit score and a reliable home loan repayment history.

In summing up, the value of mortgage brokers in Australia has continued to grow in 2023 due to their access to a wide range of products and lenders, their commitment to acting in the best interest of their clients, and their personalised and relationship-focused approach. With no cost to clients, comparable remuneration, advanced technology, and ongoing support, mortgage brokers offer a valuable service that goes beyond what traditional banks can provide. So, when it comes to your home finance needs, it is definitely worth considering the added benefits mortgage brokers like the team at Neptune Finance Australia can bring to the table. Feel free to reach out to the team on 08 9200 4840 or head HERE and book a time for a quick, obligation free chat!

As Always - the information in this blog post is general only and shouldn't be constituted as advice. Your complete financial situation will need to be assessed before acceptance of any proposal or product.



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