How to shop around for a mortgage?

A mortgage is one of the most important financial commitments. While everyone wants the best mortgage deal, it is not an easy task to find one. How can a borrower shop around to get the best mortgage deal?

Listed below are few reasons why it is difficult to shop around for a mortgage

  • Unbiased mortgage advice
  • Ineffective mortgage comparison tools
  • Mandatory credit checks before you can get a formal offer from a Lender
  • Pesky follow-up calls and spammy emails

Unbiased mortgage advice

The Final Report from the Royal Commission into Banking made 2 recommendations

  • Recommendation 1.2 – The law should be amended to provide that, when acting in connection with home lending, mortgage brokers must act in the best interests of the intending borrower
  • Recommendation 1.3 – The borrower and not lender, should pay the mortgage broker a fee for acting in connection with home lending

The government in its response to Recommendation 1.2 has implemented Best Interest Duty for mortgage brokers. The Best Interest Duty requires a mortgage broker to ensure that any advice given is in the consumer’s interest.

While Best Interest Duty legislation addresses the conflict due to volume-based incentives or campaign based incentives, it does not address the variable remuneration structure to a mortgage broker for settling a mortgage. Each lender has a different percentage of the loan amount that is paid as commission to a mortgage broker. The legislation also does not prescribe what conduct satisfies the best interest duty.

Recommendation 1.3 was not implemented. As a result, lenders can continue to compensate mortgage brokers for selling their products to consumers. You are never sure if the mortgage broker is taking care of your interest or the lender!

To top it all, the mortgage broking model has a fundamental flaw. The mortgage broker does not have access to all the mortgage products offered by all the lenders in the country. This results in the consumer being never sure if they have the best mortgage deal available in the market.

Ineffective mortgage comparison tools

One of the first action that a consumer does when they realise they need a mortgage is to go on the internet to compare mortgages. Unfortunately, there is not one mortgage comparison tool on the internet that is unbiased and covers all the mortgage products from all the lenders.

Comparison tools get paid introductory fees for clicks they generate for a lender. It is evident from the user experience of using these online comparison tools that the interest rate that actually attracts a consumer is never the interest rate that the consumer gets on the settlement date. Most of these are teaser rates that come with unreasonable conditions that a consumer almost never meets. You should also be careful to not provide any consent for credit checks at this stage.

Mandatory credit checks

If you shop around with lenders directly, a lender will almost never provide you with an offer other than the generally applicable published offer available in the public domain. If you insist on an offer to suit your personal situation, they run a credit check before they give you an offer.

A credit check on you impacts your credit rating. Unfortunately, every time a lender asks a credit agency for a credit check on a borrower, a record is left on the credit file of the borrower. You should guard your credit rating and avoid unnecessary credit checks.

Pesky follow-up calls and spammy emails

The biggest disadvantage of shopping around is the followups you have to deal with. Almost every lender or a mortgage broker collects your contact detail and a follow up to check how and why you have not accepted their credit assistance. This can be annoying and may lead to wrong decisions. In our survey, this came up as the top deterrent for consumers to shop around for a mortgage.

How to shop around for a mortgage?

FairBroker® is the solution. FairBroker®’s mission is to ensure you can shop around safely and find the best mortgage available in the market.

“Lenders and Mortage Brokers will compete by providing best mortgage deal they can offer”

There are 150+ mortgage lenders in Australia and each of them has products that match your need. You need a mortgage broker or a mortgage comparison tool that has access to all these products to compare and allow you to choose the best deal. Unfortunately, no such mortgage broker or mortgage comparison tool exists. FairBroker® brings all the Mortgage Brokers and Mortgage Lenders on a single platform. We give Mortgage Brokers free access to our platform so that maximum number of Mortgage Brokers and Lenders can compete to provide you with the best mortgage deal.

We do not collect any fee from any mortgage broker or lender to access our platform. FairBroker® platform is free for mortgage brokers and mortgage lenders to ensure we remain unbiased and provide a level playing field for all mortgage brokers and lenders to compete on an equal footing to provide you with the best mortgage and service.

It is our mission to ensure transparency and the best outcome for the borrower and hard-working mortgage broker. Looking for a mortgage or looking to refinance your existing mortgage? Create a deal request on FairBroker® and get unbiased mortgage advice and assured commission share from mortgage brokers.

You can also download our app from the google play store or the app store for iOS devices