Is go­ing to a mort­gage bro­ker ben­e­fi­cial?

Southern Real Estate Guide - - PROFILE -

The New Zealand Mort­gage Bro­kers As­so­ci­a­tion (NZMBA) is ad­ver­tis­ing their value add propo­si­tion on TV around the time slot of the Sun­day evening show ‘Prop­erty Climbers’ on TV1. Their mes­sage is when us­ing a mort­gage bro­ker (the trusted pro­fes­sional) make sure they are a mem­ber of the NZMBA and dis­play­ing that logo. There is also an un­der­ly­ing mes­sage that clients and po­ten­tial clients get the added pro­tec­tion and se­cu­rity when us­ing an NZMBA bro­ker by hav­ing a na­tional body that can in­de­pen­dently hear any com­plaints and dis­ci­pline those mem­bers who may have de­vel­oped un­pro­fes­sional prac­tises. In other words, an NZMBA mort­gage bro­ker is ac­count­able both to the NZMBA and also to some ex­tent to the lenders that he/she places busi­ness with. Above all they are ac­count­able to you, the con­sumer.

World­wide, in de­vel­oped coun­tries, na­tional bod­ies have sprung up to en­com­pass ad­vi­sory groups such as mort­gage bro­kers, to the bet­ter ben­e­fit of the pub­lic. Such bod­ies set rigid ed­u­ca­tional and per­sonal stan­dards that must be com­plied with if a bro­ker or ad­vi­sor is to re­main in the fold.

For in­stance, in New Zealand the NZMBA re­quires each of its mem­bers to un­dergo con­tin­ued prac­tices train­ing and up­dat­ing of var­i­ous lenders prod­uct knowl­edge. Some train­ing will take sev­eral days and each prac­tis­ing bro­ker must do a re­quired num­ber of set pro­grammes each year.

So it is not all beer and skit­tles for th­ese guys – they do have to earn their stripes to serve you, the pub­lic, bet­ter.

An NZMBA bro­ker is re­quired to be im­par­tial, act in­de­pen­dently of any lender and in the client’s in­ter­ests. They must have at least $1 mil­lion in pro­fes­sional in­sur­ance cover and com­ply with the NZMBA code of ethics.

This gives you, the con­sumer, com­fort and pro­tec­tion that you might not oth­er­wise get, if you deal with some­one who falls out­side of th­ese re­quire­ments.

Over the last few years there has been some no­table pub­lic­ity sur­round­ing un­de­sir­able prac­tices by cer­tain so- called fi nance ad­vi­sors or bro­kers. It has also been no­tice­able that th­ese peo­ple were not mem­bers of any or­gan­i­sa­tion and were vir­tu­ally ‘ flyby-nighters’ who have not earned the ti­tle of Ad­vi­sor or Bro­ker.

The onus is on you to check out who you are deal­ing with. A reg­is­tered NZMBA bro­ker will be able to pro­vide you with a doc­u­ment giv­ing full dis­clo­sure of their qual­i­fi­ca­tions, ex­pe­ri­ence, busi­ness as­so­ci­a­tions, time they have been in busi­ness and the fact they have a clean le­gal slate. Th­ese dis­clo­sures are checked and filed with the NZMBA.

Why not just go di­rect to the Bank?

This is cer­tainly an op­tion. Some peo­ple talk about chang­ing bank staff and oth­ers may have a strong affi nity with their par­tic­u­lar banker, which is good.

Banks have lost the pub­lic over re­cent years where now ap­prox­i­mately 40 per­cent of you (and grow­ing) use mort­gage bro­kers. The rea­son for this can be many and var­ied de­pend­ing on whose point of view you are lis­ten­ing to. Suf­fice to say there is a grow­ing aware­ness amongst the pub­lic of value us­ing bro­kers and re­tain­ing one per­son who is con­sis­tent with ad­vice, help and ser­vice.

A good bro­ker will go that ex­tra mile and in most cases it will not cost you any more than by go­ing di­rect. It would be ex­pected that a bro­ker has a wider view of the mar­ket and its of­fer­ings, than an in­di­vid­ual bank rep­re­sen­ta­tive who is gen­er­ally only skilled in their own prod­uct of­fer­ing.

But it is not just about knowl­edge and choices; it is about that much ma­ligned and mis­un­der­stood word ‘ser­vice’.

Good bro­kers will pro­vide a full con­sul­ta­tive process. In many cases this may de­velop into a fully writ­ten ‘plan’ (for which you may be ex­pected to pay a fee) en­com­pass­ing other fi­nan­cial ar­eas. A banker’s in­come can be af­fected by the prod­ucts they sell and there­fore po­ten­tially af­fect the ad­vice they give.

You should ex­pect a su­pe­rior ser­vice and a very pos­i­tive ex­pe­ri­ence. That’s what keeps those guys in busi­ness. Good bro­kers have good re­la­tion­ships with the var­i­ous lenders, which helps you even more.

But surely it costs more to go with a bro­ker?

Most NZMBA bro­kers cur­rently of­fer a free ser­vice for res­i­den­tial mort­gages. Their pay­ment comes from the lender in terms of their ar­range­ments with them.

There is al­ways a cost to a lender in ob­tain­ing busi­ness, whether it is by way of salaries and cars for staff or they ob­tain busi­ness through a bro­ker. In the lat­ter in­stance the bank or lender doesn’t have the fi xed costs in re­la­tion to re­tain­ing the bro­ker, as they do with staff, but doesn’t nec­es­sar­ily have that bro­ker’s loy­alty ei­ther.

The bro­ker will know what dis­counts, fee re­bates and other perks might be avail­able from a lender at any given time. Ef­fec­tively, they will bar­gain for you. Your in­ter­ests are their in­ter­ests, for they want to re­tain you as a client

Com­mer­cial busi­ness and non- con­form­ing loans may be dif­fer­ent. This will be where the bro­ker has some ex­tra leg work to do to shape and place your deal. Then they may charge. In this case they will be ad­vis­ing you up front.

Sum­maris­ing, a pro­fes­sional mort­gage bro­ker will de­liver you a worth­while ser­vice and pro­vide many help­ful point­ers along the way. They will tell you what you re­al­is­ti­cally can or can’t get and give you ad­e­quate rea­sons.

Re­mem­ber, they are on your side and the pub­lic are vot­ing with their feet to say that they want mort­gage bro­kers to stay around, to help keep the lenders hon­est, while giv­ing that in­de­pen­dent, client ori­en­tated view­point.

Your first meet­ing with an ad­viser or bro­ker is an op­por­tu­nity to suss out their per­son­al­ity and gen­eral approach. If they come across as ag­gres­sive or gung ho, you should move on – en­thu­si­asm is great, pushi­ness is not. A good ad­viser/ bro­ker has both ex­pe­ri­ence and em­pa­thy.

To con­tact Allistar Walker, phone 0800 005 066.

Web­site: www.mort­gage­help.co.nz.

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