30 November 2015
Portfolio Capital - Choosing the Home or Investment Loan that’s right for you.
by David Harris, Portfolio Capital Pty Ltd
In today's financial markets, especially the residential
mortgage sector, we are spoilt for choice. With literally
hundreds of providers and thousands of loan products, how do we as
consumers sift through the facts and make a choice that we can be
confident is the right one?
Too often we don't. We take the line of least resistance
and go to the bank we've dealt with for years. I equate this
to shopping for a new car and expecting a fair and reasonable
comparison between Holden and Ford from the Holden Dealer - it just
Back to mortgage lending, we in Australia have publicly owned
banks (large, small and everything in between), customer owned
banks, building societies, Credit Unions and Mortgage Managers to
choose from. Furthermore, some are state based, others are
national and still others are industry based. Many are owned
by each other.
As individual consumers we generally wouldn't have access to the
majority of these - not because they're not available to us but
because we simply don't know they exist. And yet they often
have innovative products and extremely competitive pricing
structures. They can be as much as 50 basis points lower than
the 'majors' in some instances. That equates to a lot on
money in (or out) of our pockets.
So the big question is how do we access a broad range of options
and then decide on the best choice for us.
- The Internet. The internet does provide
a platform to research what's available in broad terms. The
results you receive, however, are largely dependent on the terms of
your search, which advertisers (overt and covert) are paying for
which 'adwords' and search terms and many more factors that
influence the positioning of their Google listing. Let's face
it anything beyond page 1 of Google is a graveyard - most of us
don't go there.
Then there's the time factor - you can spend many many hours
researching and still only be confined to a few 'big names'.
- Talk to your own bank. Banks rely on a
combination of loyalty, inertia and apathy to capture their
existing customers when it comes time to apply for a home or
investment loan. After all, they have our savings, our other
loans, our credit cards - why not our mortgage?
Think of the car analogy - you're not going to hear one bank tell
you that they're a bit pricey at the moment but the lender down the
road can save you a bit of money.
- Talk to friends and family. Everyone
becomes an expert but despite the best of intentions, rarely do
they have the knowledge and expertise to properly analyse your
needs and match those to products that best suit those needs.
- Talk to a Mortgage Broker. Mortgage
Brokers are experts across a wide range to lenders and lending
scenarios. They are generally equipped with sophisticated
tools that enable them to accurately calculate borrowing capacity
across all their lenders, capture critical data enabling them to
match your criteria against available loan features and present you
with a range of options that best match the criteria - both in
terms of your requirements AND cost.
Your mortgage broker works in the best interest of YOU - not the
bank or its shareholders.
As of the September quarter 52.6% of all home loans were written
via mortgage brokers. The reason for this is simply high
levels of service, ease and convenience - dozens of lenders and
hundreds of products analysed, filtered and compared all in one
How do Mortgage Brokers get paid?
Mortgage brokers are paid a commission by the lenders and
generally do not charge their clients any fees. There are
exceptions to this latter point based on either individual brokers'
business models or, on occasion, the complexity of a loan
application. You should check this aspect prior to proceeding.
The commissions brokers are paid do not influence the rate or
fees you pay on the loan - these are the same as those offered
directly by the lender.
Are Mortgage Brokers regulated?
The mortgage broking is highly regulated with oversight by the
Australian Securities and Investment Commission (ASIC).
Broker must hold an Australian Credit Licence or be appointed an
Authorised Credit Representative by a Credit Licensee.
In order to operate they are required to maintain minimum
education standards, undertake constant professional development,
carry high levels of professional indemnity insurance, adhere to
strict industry codes of conduct and, of course, must satisfy a
criminal history check. These are significantly higher
standards than those imposed on the branch staff at your local
Talk to us.
We offer a free consultation to review your current loans or to
help with your new loan requirements - you might be surprised at
just how much we can save you. We have a large
range of lenders to choose from and work hard to make sure that you
get the loan that is right for you - not just for today but for
your future as well.
Portfolio Capital Pty Ltd