Does the bank really have your best interest in mind? –
A must read for first homebuyers, investors and small business owners.
When it comes to deciding whether to borrow directly from a bank or engage the services of a licensed credit advisor many home buyers, small business operators and, mum and dad investors simply don’t know enough about what a professional licensed credit advisor can offer them.
Whether it is for your own personal finance or finance for your business, here at Sync or Swim we can’t stress enough the importance of talking to a licensed credit advisor before applying for credit directly from a lender. A decision, which could potentially save you thousand’s of dollars, time and even determine whether you can obtain finance at all.
We recently caught up with Wayne Marks, Principal of our valued client Ladybird Homeloans and State Councilor for the peak industry body MFAA (Mortgage & Finance Association of Australia), to find out a little more on how Wayne and his team have been able to successfully assist thousands of homeowners, small business operators and investors with their credit needs.
"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. 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." Wayne Marks.
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.
In July 2010, the credit industry in Australia underwent significant reform resulting in the enactment of the National Consumer Credit Protection Act 2009 and National Credit Code. These changes, which do not apply to corporate loans, were designed to protect borrowers by ensuring 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.
Mr Marks advised us that even if a borrower is confident they are able to correctly identify the lender on the market with the lowest interest rate, they should not apply for finance directly without first seeking the proper advice and that doing so could in fact damage that borrower’s chances of successfully obtaining finance at all.
“Each initial application for finance (including those made online) creates a credit enquiry on the borrower’s personal credit file. The danger with this is that these enquires are documented and remain on file whether the application is successful or not. It is no secret in the industry that multiple enquiries on a person’s credit file looks bad and can turn off a lender that may have otherwise been happy to approve an application.“ Wayne Marks.
A professional credit advisor has access to lenders’ credit policies and can advise a client about whether their financial circumstances are in line with a particular lender’s loan requirements. This valuable knowledge reduces the likelihood of the borrower making applications that are unlikely to succeed. Generally speaking most lenders front-line staff do not have the necessary expertise required to determine whether a borrower will meet their lending policy requirements and will often lodge an application without the proper analysis.
Even if a borrower goes to a lender directly and is approved for a loan, it is then up to that borrower to go off into the wilderness and manage the real estate agent, solicitor, accountant (where required) and obtain certified copies of this, that and the other. This experience can be extremely stressful, frustrating and time consuming. Good credit advisors will save their clients from this painful experience by project managing the whole process, on their client’s behalf.
Sync or Swim are proud as punch to announce that the work of Wayne and the whole team at Ladybird was formally recognised earlier this year when Ladybird Homeloans was awarded the 2013 PLAN Queensland Business of the Year Award for excellence in customer service, professionalism and product knowledge.
“As one of the Principals of LabyBird Homeloans, it’s a privilege to lead a team of qualified licenced credit advisors who are passionate about educating homebuyers, small business owners and property investors. It’s rewarding to assist clients to obtain the right finance package for them, and see them fulfill their dreams.” Wayne Marks.
When it comes to credit related maters, we encourage all of our valued clients, their family and friends, to visit Wayne and the team at LadyBird Homeloans located at 12 Queen Street Goodna. Remember our motto - work smarter not harder! And don’t hesitate to tell them we sent you!
Loren Downing, Director and Sync or Swim team.