In March 2010, I recall seeing Refund Home Loans on The Today Show and Kerri-Anne. Apart from obviously advertising the brand, what concerned me was the way they publicly acknowledge they recruit people to become mortgage brokers that have no real financial or banking experience. In 2010 all mortgage brokers need to apply for a new licence from ASIC to continue to trade or enter the industry. In this process, ASIC consider training, experience, compliance and background of all applicants. In my view, this appears to be a last minute recruitment drive prior to licensing taking effect. I welcome the new licensing regime as in theory it will improve the standard and quality of true mortgage broker professionals.
I believe that everyone deserves an opportunity to become a mortgage broker. However, I still have grave concerns about any organisation that recruits from outside the industry sends them on a 2 or 4 week training course then sets them loose on the public. Bear in mind that we are dealing with your money and have a large role in the success or failure of your new purchase. If I wanted to become a builder tomorrow I would have to do a 4 year apprenticeship. Since commencing in banking in 1986 I bear some frustration in the previous lack of minimum entry standards that are within our mortgage broking industry.
An example I saw of this 2 weeks ago is yet another example of an inexperienced mortgage broker almost shattering the dreams of a home owner. Commonwealth Bank and Westpac had declined the loan application to purchase a home in Brisbane for around 750K. A loan amount of 90% of the purchase was sought with mortgage insurance (LMI) to be capitalised (see more on LMI at Mortgage Insurance Australia). Due to the tightening of lending policy in Australia after the fallout of the GFC during 2009, I could easily see the issue CBA and Westpac may have had. By understanding the tightening these banks have had, I simply went back to grass roots mortgage broking by checking LMI qualification and confirming details with connections I have with the mortgage insurers. The loan qualified with the mortgage insurers so we simply selected a lender that would accept the LMI qualification. If it wasn’t for the fact we knew the process and the real estate agent knew we could solve the issue, this purchaser would have missed out on buying her new home.
I should say at this point that CBA and Westpac have generally been in our top 3 lenders for several years but since the GFC they are always not the answer. Interest rates and fees are vitally important but getting the loan for the home of your dreams is even more important. The non-bank and secondary bank lenders have been hammered since the commencement of the GFC but now they have emerged with market competiveness not on price but on policy and servicing levels.
My parting words of advice are always to check the experience and quality of your mortgage broker. This also applies to people that still deal with a bank directly. The consumer is much more aware of this today I believe so if unsure get a second opinion. It may just save you!
