Recently I had a first home buyer referred to me who had been promised the world by a ‘broker’. They had a contract on their first home with a 10% deposit, and the broker promised them a great deal with interest rates in the 4%’s.
Turns out, and with limited time to go in the finance condition, that the rates from the single lender that the ‘broker’ dealt with were going to be in the 7%’s because of the 90% LVR.
"When I first spoke to her she was at her disappointed end and felt really mislead. The difference in rates made a big difference in payments. While they could still afford it, this was not what they expected.
The ‘broker’ hadn’t even talked about getting a registered valuation, which is a requirement with all lenders if you’re borrowing over 80% of the purchase price."
Not that long ago banks were considered cold and intimidating. Clients, dressed to impress, were often left waiting just so they knew how important those old fashioned bank managers were.
What really mattered most was whether or not you had a long-standing family relationship with the bank, not whether they felt they could trust you to repay the loans they gave out. Computerised credit records were non-existent.
Back then banks had less money to lend, so the chances of getting a loan from your ‘friendly’ bank manager were pretty low. Hard to come by loans were then saddled with interest rates, fees and terms all dependant on how that manager felt that day.
In contrast these days banks are inviting, air conditioned with comfortable couches. Many even keep the kids happy with a children’s play area and cartoons on TV. Those managers who used to make customers quake in their boots have finally learnt that the customer is important to the bank. They adapted, mastered the art of a genuine smile and figured out how to make the customer feel comfortable.
Now you have choices! You get to decide where you want to keep your money and take out loans from. But, despite the fact that you might feel like you’ve got an equal standing with the bank, in reality they still call the shots. They are, after all, the ones with the money!
Lending money is a banks best asset - it’s also their most profitable.
They start by loaning out money as mortgages which, unfortunately, comes with interest. These repayments outweigh the interest customers receive through their deposits to the banks, resulting in banks happily raking in the profits.
What you, as customers, have up your sleeves, are the skills to repay the loan and the interest attached to the money you borrow. So we as customers are really very important in the long run.
A banks job is to entice us, at face value everything can look great. Dig a little deeper and things can come unstuck. An experienced broker who works with multiple banks and offers impartial advice can help you navigate this often daunting process.
Back to my case study and when I became involved. With my long standing relationships with all the major lenders I was able to secure these first home buyers with an approved loan with rates in the 4%’s plus a discounted Low Equity Fee and a cash contribution. We then structured the loan in a way that completely suited them and their financial goals.
Contact the Finance Marshall today for impartial advice I would love to help you get it sorted too.
CALL US FIRST 0508 THE MARSHALL