Does your bank really have your best interest in mind?
A must read for homebuyers and investors.
When it comes to deciding whether to borrow directly from a bank or engage the services of a licensed credit advisor most home buyers and mum and dad investors simply don’t know enough about what a professional licensed credit advisor can offer them. Before making such an important decision, talking to a credit advisor could save a borrower thousand’s of dollars; time and even determine whether they can obtain finance at all.
Firstly, let’s dispel one very common misconception. Most credit advisors do not charge their clients a direct fee for their services as they receive a small commission directly from the lender or bank providing the finance. And, the cost of this commission is not passed on to the client. This is because the credit advisor has saved the lender money by bringing the borrower to them and streamlining the loan approval process. Essentially, using a credit advisor often costs the borrower nothing despite the fact that it has the potential to save them time and money.
The benefits of using a credit advisor go far beyond simply identifying which of the numerous lenders out there offer the lowest interest rates. Certainly, going to a licensed credit advisor who has access to over 25 lenders, including all of the major banks, allows the borrower to widen their net when fishing for the right loan option. But, the story doesn’t end there.
From July 2010 new regulations came into play. They are designed to protect borrowers, to ensure they are given appropriate lending solutions that meet their individual needs. Credit advisors are the only people licenced to advise a borrower on the differing products across different lenders, and on the many “loan structures” available. This means they can educate the borrower about fixed and variable interest rate loans, stand-alone security verses crossed collateralised, principal plus interest payments, interest only, refinancing, debt consolidation and the list goes on! Plus they can give insight into lender approval requirements all before providing personalised advice about which loan option and structure will best meet the borrower’s goals and requirements.
A lender on the other hand cannot provide credit advice and can only provide the borrower with general information about that bank’s specific loan products. Unlike lender employees, credit advisors are subject to strict licence requirements. This includes holding industry specific qualifications, a proven amount of experience, and participating in ongoing educational programs. Even if a borrower is confident they are able to correctly identify the lender on the market with the lowest interest rate, we would strongly advise them not to apply for finance without first seeking advice. Doing so may in fact damage that borrower’s chances of successfully obtaining finance at all.