Without unbiased and independent mortgage advice, you’ll probably wind up with a mortgage that benefits others at your expense and as a result costs you thousands of dollars too much and needless years spent in debt… even if like most people, you don’t realise what’s actually happening.
Of course to get the best results, your adviser should not only be independent, but part of an expert team who analyse a broad range of lenders and loans rather than just a handful of frequently used favourites.
The truth about independent mortgage advice
The good news is that getting independent help can cost you a lot less than ordinary mortgage brokers in advice fees or broker commissions alone, not to mention savings in interest and time spent in debt. So you could be getting debt free faster with the same or even less effort and by spending less money doing it.
Better still, there is an actual law to help guide you. However despite brokers being keen to ignore it because it usually prevents them from legally using words like independent, impartial and unbiased, this simple law can help you weed out common broker conduct that can seriously cost you. It’s called s160B and it’s part of Australia’s consumer protections known as the NCCP.
Just because a broker says or suggests they are independent or unbiased doesn’t mean they are acting legally because mortgage brokers as big as Aussie and Mortgage Choice break this law, so it’s up to you to make sure you get the best, genuinely independent advice.
Here are four key questions based on s160b to ask your adviser or broker to check if they are offering independent mortgage help:
1. Do you operate free from direct or indirect restrictions?
An independent mortgage adviser must not restrict lenders or loans for any reason other than following the NCCP consumer protections. So favouring lenders because they pay commission, how much commission they pay and so on are all big fat no-no’s.
Watch out for advisers or brokers who:
- have a set panel, then charge extra for each lender to include other lenders not on that panel because this encourages you to surrender to a restricted lender list;
- make generalisations about any loan or lender without actual reports or analysis of your situation to back them up. For example “Those types of lenders always cost more”; or “That lender is really fussy, I doubt they’d lend you that much” etc.
How flongle operates free from direct or indirect restriction:
There are four key things that we do:
- Remove your identity information then promote your wish list and capacity in an open market mortgage contest. This means any lender or broker can bid their best matching deals to win your loan free of charge;
- Invite over 100 Registered Bidders and up to 50 other direct only lenders like loans.com.au and uBank;
- Include all third party mortgage contest bids apple with apple in your comparison results. You can see how well both our lenders and bidders loans match your needs and what they cost;
- Help you add any other loan or lender to your results as a BYO loan free of charge. That way you can see how any offer you already have compares apple with apple, even if that lender didn’t bother bidding directly to win your loan.
2. Do you rebate all commissions and bonuses to me in full?
An independent mortgage broker must pay you any lender payments earned for arranging your loan and this means any payment no matter what your adviser or lender wants to call it. This includes Upfront Commission; Trail/Ongoing/Monthly Commissions, bonuses and so on.
Watch out for advisers or brokers who:
- divert a percentage of lender paid commissions (usually 5%-10%) to an associate (sometimes called an “aggregator”) before making rebate payments to you. This means they receive a benefit from the re-routed commissions, however may still claim to rebate all commission they “receive”;
- do not rebate bonuses or other lender payments merely because they claim that they are not “commission”;
- claim they are paid the same but do not rebate lender payments to you in full ;
- do not rebate bonuses or other lender payments merely because they are employees of a business.
How Unbiased rebates all commissions and bonuses in full as cash-back to you:
There are four key things that we do:
- Never split any commission or lender payment entitlement with anyone before we rebate it to you in full;
- If we arrange a loan for you, lenders will pay us multiple commissions and sometimes bonuses.
- We pay commissions, bonuses and payments to you in full each month once any outstanding fee is paid,
- Our fixed fees are a fraction of lender commissions.
^Note: Unless you as the borrower have an ABN in your name, we cannot rebate GST. GST is tax paid to the Australian Taxation Office.
3. Do you enable any and all lenders to compete equally in your comparisons?
An independent mortgage adviser must not suffer a conflict of interest which may influence them providing a service to you. This includes preference for lenders which pay commissions and/or lenders that make your adviser’s job easier.
Watch out for advisers or brokers who:
- only deal with a set lender panel or range of lenders that pay your adviser/broker commissions;
- claim to deal with any lender while showing a clear preference to their set lender panel;
- do not actively enable any lender to consider your scenario (identity removed) and compete to win your business for free;
- are not independent yet claim to put your best interests first because there is no legal requirement for them to do so, This claim has been seized by some businesses to infer they are independent when they cannot legally use terms like independent, impartial or unbiased.
How flongle maximises competition and removes conflicts of interest:
There are five key things that we do:
- Take time to understand your situation; and if appropriate, create and launch your mortgage contest. That means you can see what we can deliver before agreeing to pay us anything;
- Remove your identity information then promote your wish list and capacity in an open market mortgage contest. This means any lender or broker can bid their best matching deals to win your loan free of charge;
- Invite over 100 Registered Bidders and up to 50 other lenders like loans.com.au and uBank;
- Include all third party mortgage contest bids apple with apple in your comparison results. You can see how well both our lenders and bidders loans match your needs and what they cost;
- Help you add any other loan or lender as your Current Best Deal. That way you can see how it compares even if that lender didn’t bother bidding directly to win your loan.
4. Do you refuse all gifts including “free conferences”?
An independent mortgage adviser must not accept any gift which could create a conflict of interest which may influence them providing a service to you.
Watch out for advisers or brokers who:
- claim that offsite “industry conferences” are essential training;
How flongle refuses gifts and removes conflicts of interest:
There are three key things that we do:
- Refuse all gifts including mugs, free lunches, subsidised travel and conferences;
- Only ever accept product training at our office or training in lender’s office where delivery to our office is not possible;
- Say no to lender invitations, gifts and competitions.
Click here for expert, independent mortgage help from the team with industry leading customer satisfaction.
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