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Where we are now

Over 6 in 10 home loan borrowers now use a broker (but only 2 out of 10 businesses – and this will change rapidly now that businesses are getting access to a lot of borrowing options which were not previously available to them).

And, a recent survey showed that 1 in 4 borrowers who were with a High Street Bank are looking to move away from their current bank.

Food for thought for the Big Banks you would think…..

In the beginning…

Before I started my finance business, I had identified that banks were not always a borrower’s best friend.

It was not that they were necessarily ‘against you’ (although that sometimes was the case from anecdotal evidence you would hear).  Rather, their service levels and service responses and pricing advantages were ‘neutral’ or ‘non-existent’ for existing customers.

For new customers, they would fall all over you, even making out that you had access to a ‘relationship manager’.  In reality, once the loan was signed up, and you were locked in, your relationship manager never contacted you again with respect to your loan.

Now, this scenario is nothing new to those who are used to dealing with large institutions.  Phone companies, energy utilities, finance institutions, insurance companies – they all tend to look after new customers better than their existing customers.

As someone who has studied marketing, I never quite understood this given that it is cheaper to retain an existing customer than find and sell to a new one.  But then again, I do understand because I also know these large institutions rely upon ‘customer apathy to change’. Because of this reluctance to change, institutions, who largely play a numbers game, take the view that they can reduce the cost of servicing existing customers to pretty close zero and only lose a small number of customers to churn.

Unfortunately, what they seem to miss (or perhaps underestimate) is the silent aggravation they cause amongst customers who want more and want better – and who, if they are given a real choice, will ‘up and go’.

So, what does this have to do with brokers?

Well, brokers provide the tools for customers to positively action change without the customer having to do the hard work (ok, there is still a bit of hard work to do but most of the heavy lifting is done by the broker – assuming you have a good broker!).

Here are some reasons why you can consider using a broker (and yes, we are in this for a free plug for BIR Solutions so read on! 😊 ).

  • As noted above, your money is most likely to come via a broker who will source a great deal for you; perhaps from one of the Big Banks but perhaps from a non-retail bank or a credit union or non-bank financier.  There are over 30 lenders to choose from – and apart from the Big Banks, most of them only use finance brokers to get their products to you.
  • Going down to your local high street Big 4 Bank is like shopping from a ‘one brand’ retailer.  You have to buy what they are selling – and if you don’t fit into their branded dress or pants, tough luck.
  • Banks are not required to give you their cheapest product.  If you end up buying a more expensive product when a cheaper one would do, well, again, your tough luck.
  • No bank is required to update you if they come up with a better offer for their customers.  In fact, they tend to reserve these ‘better deals’ for new customers they are trying to woo.
  • Banks don’t review your loan and its suitability until….. well, until you make the decision to refinance.
  • You don’t have a relationship manager (particularly if you have to ring a 13 number!).

 

If you would like to find out more about how to get a great deal from a broker, give us a call – and since we like to be personal, you can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au

Reprint of an article in www.smartcompany.com.au  July 2010 by Patrick Stafford

Whilst not a recent article, it nicely explains a lot of the issues expanding business face.

Background

James Spenceley co-founded wholesale telecommunications provider Vocus in 2007, and since then the  company has exceeded his expectations, turning over profit every year, with 2008-09 revenue of $5.2 million. The company was listed on last year’s SmartCompany Start Up Awards. But the biggest improvement occurred only this year, when investment firm Investec bought the company for $20 million, and listed it on the ASX as Vocus Communications. Spenceley says the company is now able to pursue a number of expansion projects overseas that it couldn’t have done before.

The key, he says, is finding a good investor. Spenceley believes small businesses looking for investment should analyse themselves constantly and look for ways to make themselves attractive to larger, cashed-up companies

Are you happy with the ASX listing this mouth ?

Absolutely. We knew we had prepared, we thought the offer was reasonably priced it was great to see such a good result from day one . We think it started off very Strongly.

 

Would you like more information? You can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au

In other articles, we have shown that brokers now process more loans than the Big 4 Banks – about 6 out of 10 borrowers now use a broker and 1 in 4 borrowers who are with a Big 4 Bank are looking to change.

When shopping for a loan, here are 6 common issues borrowers need to consider before seeking a particular loan. Of course, if you use a broker, they will (or should) ensure you have considered all of these issues before you proceed with an application for a loan.

 

1. Low Advertised Interest Rates

Borrowers are often wooed by the advertising of low-interest rates.  And understandably, they often shop online to find the lowest deal.

What they don’t realise is that the lowest advertised deal is just the same as a car advertisement – the key word is the word immediately prior to the advertised price ‘from…’.

And like a car, the cheapest rate is often the ‘no frills’ rate.  It doesn’t have as many features as the premium model and like the cheapest car, when you get behind the wheel, it can feel a little cramped and dare I say it, ‘featureless’.

Plus, you soon discover that not many customers (and certainly not all customers) fall within the small group of customers who fit the profile for this ‘featureless loan’ (unlike a car where the customer chooses which car to buy, with a loan the banks decide who fits which loan – you can want the loan but the bank may not want you!).

If you use a broker, they will work with you to ensure you set realistic expectations of the rate you are likely to be able to negotiate.

 

2. Credit Cards

We all love our credit card!  And, we love a high limit so we can ‘always have enough in reserve for those emergencies.

The problem is the lenders like to look at the limit and not the amount you spend each month – even if you pay it off before incurring any interest charges.

To put this into an example, a credit card with a $20,000 limit which is only used up to $4,000 per month and paid off each month end is assessed by the lender as being the equivalent of $20,000 in debt – not $4,000 and certainly not $Nil.

Good brokers review your limits before you start the loan application process as they know what a particular lender is looking for and whether your credit card limits might impact the amount you can borrow.

 

3. Credit offered by retailers: aka ‘After Pay Lenders’

Every time you obtain credit from a shop, guess what happens: the lender who provides the finance for the retailer has a peek at your credit file. And this peek is noted for all other lenders to see – even if you don’t go ahead with the loan.

And, every time a lender has a peek, it adversely affects your credit score. You can have a perfect credit history in terms of zero defaults but these peeks represent a warning to a potential lender. They suggest you are looking to borrow money ‘here, there and everywhere’. Now, this might not seem fair but it is the world of credit we live in.

Sometimes, your broker will suggest you ‘cool your heels for a while’ and get your credit score up before applying for a loan.  Or, they will assist you set a realistic expectation before you start so you don’t get a nasty shock later on.

 

4. Honeymoon or introductory home loan rates

Quite naturally, borrowers are attracted by the interest rate quoted for the first year of a contract.

These facilities normally revert to the “standard variable rate” after the first year.  The issue is, is this standard variable rate equal to or worse than the rate you can negotiate up front?

Chances, are, once a lender has got you in with their honeymoon rate, the rate you revert to after the honeymoon period is going to be higher than the rate you can negotiate up front – particularly if you are using a broker as brokers know ‘how low you can go’.

 

5. Fees and Charges

Most, but not all loans will probably have a range of non-negotiable establishment fees for the application process, the lender’s legal costs and the valuation fees.

A broker will be aware of these costs for each lender and will factor them into your funding needs.

Also, there may be exit fees, particularly for fixed rate loans if you want to exit the fixed rate portion before the term for the fixed portion has expired.

Your broker should ensure you have considered this issue and made sure you have considered what is best for you in terms of the mix of variable and fixed loan amounts.

 

6. Fixed Rates

These days, many borrowers consider putting a portion of their loan in a fixed rate loan so they get some certainty as to the repayments.  Whilst this is a good idea to consider this option, it is not without its own risks and issues.

Apart from exit fees for an early exit of a fixed rate loan, fixed rate loans can be more restrictive in terms of some loan features such as interest offset accounts, extra repayments and redraw facilities.

Your broker can explain to you what restrictions will apply to your fixed rate loan with a particular lender before you dive in to ‘lock in a good rate.’

 

Would you like more information? You can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au

Are you a winner in this year’s budget?

The 2021-22 budget has now been released. There’s a lot of talk and I want to help break down the key initiatives targeting home ownership which could help you get into the property market sooner.

 

Family Home Guarantee 

This is a newly created government scheme that will see 10,000 places made available over a four year period, this means 2,500 First Home Guarantees will be made available each year.

This scheme will provide single mums and dads with dependants the chance to build a new home or purchase an existing home with a 2% deposit without having to pay lender’s mortgage insurance, also known as LMI.

While this is a great initiative, it’s important to note that it will be a competitive market out there. With interest rates at an all time low and a mortgage broker on your side, I can help you understand your options and see if you’re eligible for this scheme.

 

CLICK HERE TO GET YOUR FREE REPORT

 

First Home Loan Deposit Scheme (FHLDS) 

Also known as the New Homes Guarantee, this scheme will provide an additional 10,000 places in this year’s federal budget.

If you have a 5% deposit, looking to build a new home or purchase a newly built home, this scheme could help you get into the property market sooner.
Of course, getting a 5% deposit for a home is easier said than done. That’s where I can help! I’ll review your situation, look at the options and provide a solution that suits you and your needs.

It’s important to note there are property price caps that vary from state-to-state for this scheme.

Again, this scheme is ultra competitive, reach out to me if you’d like to know more.

 

Super Saver Scheme (FHSSS)The FHSSS scheme allows you to save money for your first home inside your super fund. In this year’s budget, the government announced that the maximum amount of money able to be released through the Super Saver Scheme has increased from $30,000 to $50,000.

 

Instant asset write off 

Good news if you’re a business owner! The instant asset write off scheme was due to expire on June 30, 2022.  However it will now continue for another 12 months, giving business owners the chance to use it for all eligible assets acquired from 7.30pm on October 6, 2020, and first used or installed by June 30, 2023.

Even though it can sound like a lot of noise, the release of the Australian budget is a good time to reflect and ponder on your own budget and goals. I’m here to help – whatever you might need. Simply call or email and let’s discuss how I can support you.


Disclaimer: This document has been created by Loan Market Pty Ltd (ABN 89 105 230 019, Australian Credit Licence number 390222). It provides an overview or summary only and it should not be considered a comprehensive statement on any matter. You should before acting in reliance upon this information seek independent professional lending or taxation advice as appropriate specific to your objectives, financial circumstances or needs. Information included has been sourced from third parties and has not been independently verified. Accordingly, Loan Market Pty Ltd is not in any way responsible for nor provides any warranty express or implied as to its accuracy or relevance. It’s important to note the budget proposals are not yet legislated and are subject to change or defeat in the Australian Parliament.

 

BIR Solutions is part of Loan Market

Source: https://www.loanmarket.com.au/news/are-you-a-winner-in-this-years-budget

 

Would you like more information? You can ring us now 1300 989 878 or email us at moreinfoplease@bir.net.au

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BIR Pty Ltd ACN 117185654, trading as BIR Finance, Credit Representative Number 517662, is authorised under Australian Credit Licence 517192 held by LM Broker Services Pty Ltd ACN 632405504

Disclaimer statement: This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This page does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Where applicable, this page is subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

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