Remember when fast food chains had ‘undercover customers’ checking in on the quality of service at your local KFC? Well, that’s now the case for mortgage brokers in Australia.
The Australian Securities and Investment Commission (ASIC) is set to release hundreds of undercover clients on brokers around the country.
Here’s what you need to know.
Why is ASIC going undercover?
ASIC Senior Executive Michael Saadat told the Australianthe commission would like to better understand, “whether broker advice results in good outcomes and whether borrowers are making an informed choice and being sold products that meet their needs”.
Saadat said ASIC’s intention is to discover what factors lead mortgage brokers to sell different kinds of mortgages, and whether there is room for improvements in behaviour.
“As part of our ongoing review of mortgage broking practices, we are undertaking consumer and broker research to better understand the home loan purchase process,” Saadat told the Australian.
What drives mortgage brokers to recommend home loans
According to Business Insider, over 50% of new home loans are initiated by mortgage brokers in Australia.
With this in mind, it’s easy to see why ASIC is taking measures to ensure the practices of mortgage brokers across Australia are better understood.
While we cannot explain how all mortgage brokers make decisions around recommending home loans, we can certainly shed light on our own methods.
In fact, being transparent about our processes and motivations is very important to us, as we believe our clients should know all the facts before engaging us, and choosing a mortgage.
Selecting finance to buy a home is one of the biggest financial decisions you’re likely to make in your lifetime. We take this responsibility seriously.
Here is how we pinpoint a loan for our clients:
First, we spend time getting to know what your finance goals are. We also discover more about your circumstances, and look at financial data, and other factors, to determine what repayment budget is right for you.
This research phase is integral to our process, as it gives us the background information to tailor a home loan product that fits your unique circumstances.
We don’t just look for the lowest interest rate, we compare hundreds of loans from different lenders, and look at factors like ongoing fees, repayment terms and interest rates too.
Most importantly, we don’t get incentives from any lender. We do however, get a commission from the lender you choose, when the loan is settled. This means our home loan service is free of charge to you.
The commission we receive covers the time we took to complete and lodge the home loan application, and handle the process with the lender.
The lender would normally do this, but since we do the work for them, they cover this cost for us.
We’re also here for you whenever you need us. So, if you want to make sure your home loan is still serving you, we can review it on a regular basis to ensure you’re still getting an attractive rate and terms.
We recommend having your home loan reviewed every 12 months, just to make sure you’re not wasting money on your current loan. Rates and terms change all the time, and sometimes, there’s a way to save more.
We love what we do, and we live to find a loan that matches your goals and circumstances.
This is what motivates us, as we believe if we do a great job for you, you’ll engage us again, and of course, we get a kick out of seeing you achieve your financial goals.
Oh, and you also get peace of mind that the loan you choose is right for you.
All in all, we welcome ASIC’s mystery borrowers, as we believe any review of the finance sector, which results in better outcomes for borrowers, is a good thing.
Talk to us about your next home loan today.
Financial Advice Disclaimer: This information is general in nature. Mortgage brokers do not provide financial advice. Clients seeking financial advice will be referred to a qualified financial planner.