Are they accredited/qualified?
When you see your local GP, it would be a very concerning if he where not trained wouldn’t it? The same can be said for your finance manager. Make sure they are members of an industry body such as the Mortgage & Finance Association of Australia (MFAA) and are part of an external dispute resolution scheme such as the Credit Ombudsmen Service Limited (COSL). Make sure they are Tier 2 compliant or have completed their Certificate IV in Financial Services.

Fee’s & Brokerages
In most cases the bank or broker can have an application fee waved. Keep in mind though that some low rate options do not allow the application fee to be waved and are still very good value. Discharging or break fees are the new ‘in thing’ with lenders and can range from $700-$5,000+ when you refinance or finalize your loan! Make sure you get all the facts from your finance manager before taking up any loan, including the discharging fees! 

Do they offer protection for any unforeseen circumstances that may occur during the term of the loan?
Good finance managers will have access to a financial planner that can help you with different types of cover for your specific needs. Any product that claims to be ‘mortgage protection’ is usually an expensive option, often a financial planner can help you with Income Protection and Life Insurance for the same price and many more benefits!

Professional Packages
These packages can save you a lot of money on total bank fees and interest rates, usually packaging together your bank account, credit card and home loan for one fee. The fees normally vary between $240 and $400 per year. The general rule of thumb for professional packages is, if your loan is less than $300,000, these fees generally do not work out cheaper. Ask your finance manager to show you the total yearly repayments including the fee on the professional package and compare it to other options that are not on professional packages.

Types of loans
Fixed, Variable, Split, Professional Package, Low Doc, No Doc, Line of credit, Basic, Offset, Honeymoon, Interest Only!!! I hope I made my point, speak to a professional finance manager to help you decide which of these is suitable for you. Make sure they ask you questions on your end goals as well as your current cash flow to decide which is most suitable.

Fixed vs Variable
The best way to decide which one is more suitable for you is to ask yourself the following question. If I kept my loan at a variable rate and the rates went up 1-2% would I have to sell the house? If you answered yes to this question then fix a portion of your loan. Never fix for more than 5 years though, things can change a lot in 5 years and fixed rates generally have higher discharging (break) fees. Also, always keep in mind with fixed rates you can only pay off a small portion over the minimum repayment each year, a good idea is to always keep some of your loan variable.

Find out exactly what they will be using as security
Banks and lazy brokers will normally take all the security (property) they can get to set up the loan. It saves them time and effort but increases the risks for you. If you have multiple securities make sure they are not cross secured, if they are, any losses you may incur on one property will potentially risk the other property(s).

Bank vs Brokerage
Having been on both sides of this debate, I think you can safely say that it is not the bank or brokerage that is the main concern but the person you are dealing with. Brokers have many more products and if you are not the average ‘vanilla’ client than a brokerage is definitely the better option. They have many more lenders to choose from, including your bank, and can normally place your specific situation with one of them. If like most of us, you’re a genuine good prospect, your options are open. But keep in mind, your local bank may not have the suit of products to give you the best possible deal out there. 

Banks vs Brokerage - Priorities….
Banks, as we keep hearing them say, have their shareholders interests in mind first and foremost. Brokerages on the other hand, get paid from the banks at similar rates (there is some fluctuation between lenders in terms of commissions) and only get paid that money if you are successful and take up their service. Although, as stated earlier, it is the person you are dealing with, inevitably, that can make or break your experience. I know that when I was a banker, the bank’s profits where the furthest thing from my mind!!


Please Note: This document was written by Bill Nikolouzakis, Managing Director of Nyko Group Pty Ltd, based on his personal experiences and years of experience in this field. Bill is a fully qualified mortgage broker, has completed his Certificate IV in Financial Services (Finance/Mortgage Broking), and is an Associate of the Mortgage & Finance Association of Australia (MFAA).