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Why use a broker?

I had a couple referred to me who were trying to purchase a owner occupied property. They had been to see their bank manager who advised them they did not have sufficient income to service the debt level they sought. They were selling an existing owner occupied property to purchase the new property. They also had an existing investment property in Sydney. All with the same major bank.

The bank manager told my clients, that as the bank was the banker for their employer (a major Queensland University, they would have been entitled to a discount of 0.25% p.a. off the standard variable interest rate.

After perusing their details, I was able to secure a loan for my clients with their bank for the full amount they required, plus obtained a discount of 0.60% p.a.off the standard variable rate, which was available to any applicant.

I have had similar situations with customers being told by their bank manager that they are unable to secure finance, however I have been able to secure the finance with their bank.

Are we industry accredited?

Often in the press, you see stories regarding ‘dodgy’ finance brokers. Well, yes, there are unscrupulous players out there, just like any other industry. These unscrupulous operators are usually few and far between, and will generally be exposed.

To give yourself some comfort, always ensure your broker is MFAA (Mortgage and Finance Association of Australia) accredited plus is a member of COSL (Credit Ombudsman Service Limited).

As members of both the above organisations, the broker is bound by a strict Code of Ethics.

Also, to obtain accreditation with the MFAA, a broker must attain a certain level of training within the industry.

What if the bank says no?

One in ten home loan applications are turned away from banks and mainstream lenders because they are considered to be non-conforming.

Self-employed? Contractor? Older Borrower? These so called ‘unusual circumstances’ can cause a major headache when applying for a home or investment loan. These solutions and many more, as insignificant as they may seem, can be enough to see you rejected by banks and mainstream lenders. But there’s no need to abandon your ideas of home ownership or investment altogether. Increased competition in the home loan market has seen more and more products and even lenders emerge to cater especially for these borrowers.

Specialised lending criteria

Whilst there are exceptions to every rule the most common grounds for finance refusal are based on occupation, employment conditions and type of property for purchase. And as such the following borrowers are more likely to be classed as non-conforming:

• Self employed
• Seasonal/contract workers
• Over the age of 55
• Poor credit history
• Small or no deposit
• Non-residents

Specialised lending products

Products such as ‘LoDoc’ or ‘NoDoc’ loans are designed for the self-employed or small company borrowers whose financial statements are not available or are out-of-date, even though they are quite capable of making loan repayments.

Depending on your situation, specialised products may be just as competitive as their mainstream counterparts. Flexible features such as line of credit and split loan facilities may also be available.