Jan
26
Who Are You Borrowing From In Australia?
January 26, 2009 | | Leave a Comment
In today’s mortgage market consumers are spoilt for choice when it comes to applying for a home loan. Banks, building societies, mortgage managers and mortgage brokers are all available for you to consult. Most of us are familiar with the first two; fewer of us know how they are different. And what exactly do they represent?
The terms “mortgage manager” and “mortgage broker” can be perplexing.
For most borrowers, the market is becoming more confusing, despite the fact that many people are now more educated about mortgages and property than they were five years ago, and there is a growing need for an explanation of what the different roles mean for borrowers.
Mortgage brokers can arrange finance from a range of financial organisations. Often a broker sells loans for a panel of 20-30 different lenders. In return, they receive upfront and ongoing commissions.
They can arrange finance where a property – owner-occupier, rental investment property, or commercial property – is being used to secure a loan.
Mortgage managers manage securitised funds (essentially a pool of investors’ cash) on behalf of the supplier of the funds (usually a large financial institution who has issued bonds or “mortgage-backed securities”). They can offer their products directly to the borrower or through their accredited mortgage brokers, or both. They deal directly with the consumer and manage the relationship for the term of the loan.
To try to reduce confusion, a group of mortgage managers have recently united to form the Council of Mortgage Lenders (CML). The CML has been established to promote the distinct role of mortgage managers and clarify the differences between the groups. “The problem is that all lenders have been thrown together in the same mixing pot,” the CML said in a statement.
New legislation managed through the NSW Office of Fair Trading states that “mortgage managers” who don’t deal with the public or who only sell their own loan products, are exempt from having a Finance Broking Contract (FBC). However, an FBC is required if a mortgage manager provides information or an offer for the loan product or on behalf of another lender.
When selecting someone to help with your next home loan it should still come down to the experience and qualifications of the individual and the company, the systems in place to process and monitor your loan account and the level of service promised and delivered.
*Jennifer Schelbert A. Fin. / Dip.Fin.Serv. /FinMBM is a director of Mrs. Mortgage, a licensee for Choice Aggregation Services, and a full member of the Mortgage & Finance Association of Australia & COSL.
Phone: 61 3 9315 9750
Disclaimer: This document is for information purposes only, and must not be relied upon as a substitute for professional services or legal advice.
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