Melbourne Mortgage Broker Archives

Understanding How do Mortgage Brokers Get Paid: No Extra Cost, Just Extra Value

Posted on 08/11/202402/12/2024 by Rix Almonicar

When navigating the complex world of home loans, Australian borrowers have increasingly turned to licensed mortgage brokers for expert guidance. As of the publication of this blog, Australian mortgage brokers write approximately 70% of all home and investment loans (Source: Mortgage & Finance Association of Australia MFAA Media Release September 9th 2024).

One common question that often arises is: How are mortgage brokers paid? This blog article aims to clarify how brokers are paid and why using a mortgage broker generally incurs no extra cost for borrowers while providing substantial advantages.

How Mortgage Brokers Are Paid in Australia

In Australia, accredited mortgage brokers receive remuneration through commissions paid by banks and lenders. Typically, brokers earn an “upfront commission” for facilitating a new loan, followed by an ongoing “trail commission” as long as the client retains their loan with the lender. The important thing to note is that these commissions come directly from the bank or lender, meaning there is generally no out-of-pocket expense for clients using a broker’s services. These lender payments are part of their customer acquisition costs—a cost they would also incur if you went directly to them through their internal sales channels.

In most cases, borrowers pay no fee for the professional services of a mortgage broker. It’s also worth mentioning that reputable brokers are legislated to provide transparency and will always disclose how they are paid, ensuring clients have a full understanding of any arrangements in place.

The Benefits of Using a Mortgage Broker

While there is usually no additional cost in using a broker compared to approaching a lender directly, there are many advantages that make brokers a preferred choice for many Australian borrowers.

Acting in Your Best Interests

Australian mortgage brokers are legally required to operate under the “Best Interests Duty” introduced in 2021. Unlike bank representatives, who are naturally inclined to promote their bank’s own products, brokers are required to work for you. They provide advice, not just a product, taking into account your individual needs and financial circumstances to recommend the most suitable loan options from a range of lenders. This approach ensures that the focus is on finding a solution that works best for your unique situation.

Expertise Across Multiple Lenders

Mortgage brokers have access to a broad panel of lenders, from the Big Four banks to smaller banks, credit unions and non-bank lenders. This wide access allows brokers to provide clients with a comprehensive selection of mortgage options. Each lender has its own rules, policies, and lending criteria, and an experienced mortgage broker understands these intricacies inside and out. By having this knowledge at their fingertips, brokers can match borrowers to the right lender, taking the guesswork and hassle out of the process.

Whether it’s navigating a complex employment structure, securing a higher loan-to-value ratio (LVR) without mortgage insurance for those working in specialist industries like doctors, medicos, engineers and lawyers, or understanding how specific lenders assess borrowing capacity, brokers can make the process smoother and ensure a higher chance of approval.

Tailored Guidance Throughout the Process

Buying or refinancing a home or investment property is often one of the biggest financial decisions in your life, and the associated paperwork can be daunting. Licensed mortgage brokers simplify this journey by managing the application process end-to-end, ensuring your paperwork is correct and submitted on time. Moreover, brokers maintain open lines of communication throughout, giving clients peace of mind and helping them understand their options, even if situations or rates change.

Using a mortgage broker means you are getting tailored, personal guidance—rather than a one-size-fits-all sales pitch—and can save time, reduce stress, and ultimately secure a better home loan outcome.

Why Using a Mortgage Broker Is Smart and Cost-Effective

Since banks essentially pay for the origination services that brokers provide, clients benefit from professional, industry-leading advice without paying more. The value mortgage brokers deliver is not just about finding the cheapest rate but involves building a strategy that considers your goals—whether it’s buying your first home, investing, or refinancing.

Mortgage brokers, like those at AXTON Finance, also work to negotiate better rates and terms on your behalf. Because brokers send significant business to lenders, they often have negotiating power that individual clients might not. This means they can advocate for discounts and benefits that may not be available when approaching a lender directly.

The Added Benefit of Long-Term Service

One of the most significant advantages of working with a mortgage broker is the ongoing relationship that extends well beyond the initial loan setup. At AXTON Finance, our brokers are committed to re-pricing and retention to ensure that the interest rate you receive not only starts great but remains competitive throughout the life of your loan. This proactive service is something you are unlikely to receive as a direct bank customer. Imagine walking into a bank today to secure a rate, and then in 12 months’ time, that banker knows there’s a better rate available—but it’s unlikely they will reach out to inform you or suggest refinancing to another lender without your initiation.

At AXTON Finance, we focus on creating these types of lasting relationships rather than transactional ones, which is why most of our clients come to us through referrals and continue to work with us for years. We not only help our clients in the first instance but on an ongoing basis, supporting them, their friends, and their family members as their needs evolve. Given our long-standing experience, we pride ourselves on providing clients with exceptional, continuous service to ensure they always have the best mortgage solution for their needs.

Ready to Get Started?

If you’re considering buying a home, refinancing, or simply looking for professional mortgage advice, get in touch with the award-winning team at AXTON Finance. Our experienced brokers are here to guide you every step of the way, offering personalised service and ensuring your best interests are always our priority.

Connect with one of our highly experienced brokers today at AXTON Finance and discover why hundreds of satisfied clients continue to choose us for their mortgage broking needs.

Merging Expertise: Welcoming Aviser Finance to the AXTON Family

Posted on 28/10/202408/11/2024 by Rix Almonicar

We’re thrilled to announce an exciting new chapter for AXTON Finance: the official merging of Aviser Finance into the AXTON family! This partnership brings together the expertise and dedication of both companies to create an even stronger, more personalized mortgage broking service.

After many years of working alongside one another and maintaining a close industry relationship, it was the perfect time to take this next step. We are excited about this merger, which reflects our shared values and commitment to putting client goals at the forefront of everything we do.

Aviser Finance, led by Martin Ryan, has long been recognised for its high standards of professional mortgage advice, personalised service, and deep care for their clients. We are delighted that Martin, along with Tonina, Joyce, and Anne, have all joined the AXTON Finance team. Together, we are ready to grow stronger and continue offering the same exceptional service that Aviser clients have come to expect over the years.

For Aviser clients, while the company name may be different, the exceptional team you know and trust remains the same. Martin and his dedicated team will continue providing the mortgage solutions and guidance you rely on, now under the AXTON Finance banner. Our combined experience and enhanced capabilities will serve to bring even greater value to your mortgage journey.

This merger is not just about joining forces; it’s about growth, shared purpose, and building a future that benefits our clients. By integrating Aviser Finance into AXTON Finance, we can draw upon a broader network of expertise, enhance our service offerings, and ensure our clients benefit from a supportive and knowledgeable team that puts their needs first.

We are excited to welcome the Aviser Finance clients and team members into our AXTON Finance family. With our shared vision of excellence and customer-first service, we look forward to building a prosperous relationship and continued success together.

If you’re an Aviser client or want to learn more about the benefits of working with AXTON Finance, don’t hesitate to get in touch. We’re here to provide the same level of care, dedication, and tailored solutions that have always been our hallmark.

How to Choose a great mortgage broker?

Posted on 03/06/202409/09/2024 by Nick

If you are trawling the internet to find a great mortgage broker then these seven tips are what you should be looking for;

Minimum Five Years Broker Experience: Ensure your broker has substantial experience handling various scenarios and providing you with experienced advice earned over years, not months. Newer brokers will be desperate to originate your loan application at all costs and will often lack the experience to prepare a high-quality mortgage application submission that may result in your loan taking longer to be approved or even declined.
Strong Online Google Reviews: Check for positive reviews and testimonials from previous clients to gauge their reputation and service quality. Be wary of lots of short reviews that appear in a condensed period, as they are less likely to be legitimate. Instead, look for someone like AXTON Finance, who has hundreds of excellent reviews over many years. A simple independent search of the company name plus the word ‘reviews’ will help you determine if they pass your sense check.
Fully Licensed: Verify that your broker holds all necessary licenses and certifications required by regulatory authorities. As a minimum your licensed mortgage broker should have a Certificate IV in mortgage lending but preferably a Diploma in Mortgage and Finance Broking. Licensed mortgage brokers should be members of the MFAA (Mortgage Finance Association of Australia) and/or the FBAA (Finance Brokers Association of Australia). You can check their credit license status via the government’s ASIC (Australian Investment & Securities Commission) website here. Mortgage Brokers are also required to be members of the government’s Australian Financial Complaints Authority (AFCA) should there ever be the need to lodge a complaint that cannot be resolved.
Comprehensive Product Knowledge: Look for a broker who is well-versed in various mortgage products and scenarios and can offer you tailored options that fit your needs. Not all mortgage brokers are experienced enough to handle your application if you have any unique or complex variables about your situation especially if you are self-employed, have complex income streams, are an expat and/or a high net worth individual.
Transparent Fee Structure: Ensure that your broker provides clear and transparent information about their fees and commissions to avoid any hidden surprises. All licensed mortgage brokers are required by law to disclose their remuneration earned on all regulated loan applications lodged to help comply with best interest duties that champion your interests first.
Excellent Communication Skills: A good mortgage broker should maintain open lines of communication, keeping you informed throughout the process and promptly addressing any concerns. Ideally, your trusted mortgage broker will be updating you through efficient systems of communication instead of your chasing them up seeking an update.
Proactive and Personalized Service: Choose a broker who takes the time to understand your financial situation, goals, concerns and preferences, offering proactive and customized advice rather than a one-size-fits-all approach.

This checklist will help you find a mortgage broker who can provide valuable guidance and support, ensuring a smoother and more beneficial mortgage experience.

As shameless self-promotion, we are confident we will pass all seven points summarised above, so why not save yourself the time and risk and call us for an obligation-free chat today?

Is Your Mortgage Broker an Advisor or an Order Taker?

Posted on 03/06/202403/06/2024 by Nick

Recently I had an existing long-term client that I worked with for about six weeks who needed a significant equity release to help leverage his investment property portfolio. It was a complex scenario that had a narrow path to an approval but one that I had confidently solved. However in the space of a weekend he pivoted to another broker based on a quick conversation solely about rate. It didn’t end well for them and they came back to us rather sheepishly and proceeded with our tailored solution.

This got me thinking.

We all want a great rate but we need that rate to suitably match the scenario that will also result in the approval!

The role of a mortgage broker can vary significantly depending who you entrust with this important service. Some brokers act as mere order takers for a product, while others function as true advisors. Understanding the difference can have a substantial impact on your mortgage application experience and financial outcomes. What is the difference, you might ask? Well, let’s explore!

The Order Taker

An order taker in the mortgage industry is exactly what it sounds like: someone who processes requests without offering substantial guidance or advice. These brokers typically follow a straightforward, transactional approach usually based on a ‘best interest rate’ discussion as the focus. They gather your financial information, compare some suitable options, and present you with the ‘best rate’ that comes back. Their primary goal is to complete the transaction as quickly as possible and move on to the next client.

This approach does have its benefits. Order takers can be quick and give you what you want, which might be appealing if you are confident in your understanding of mortgage products. However, it can be costly as they do not take the time to understand your true intentions and ensure that what you are doing currently aligns with your long-term goals. This lack of personalized advice is a significant drawback.

If you’re not well-versed in the nuances of mortgage structuring, you might miss out on better deals or fail to understand the long-term implications of your mortgage choice. An order taker won’t typically take the time to understand your true intentions and will look to execute the short-term goal at the cost of future plans to get a fast turnaround and a quick commission.

The Advisor: A Proactive Approach

In contrast, a good mortgage broker who acts as an advisor takes a much more engaged and consultative approach. Advisors invest time in understanding your overall financial situation, future plans, and risk tolerance. They don’t just process paperwork; they provide tailored recommendations that align with your specific needs to ensure they are putting you on the path to achieving your long-term goals.

Advisors will often educate you about different mortgage products, explaining the pros and cons of each option in the context of your personal circumstances. For instance, they might suggest a fixed-rate mortgage if you value stability and predictability in a rising rate market, or a variable-rate mortgage if you can tolerate some risk for potentially lower rates. They may also delay an application that does not fit with your goals, taking the longer route to ensure you are getting the correct advice and assistance, rather than just the quick result.

Moreover, an advisor can help you think strategically about your mortgage. They might advise you on how to structure your mortgage to pay it off faster with a multiple offset account, how to leverage your mortgage for investment purposes, or how to use refinancing options to manage debt. This level of service often results in a more favorable mortgage experience and can save you money in the long run.

Determining Your Broker’s Role

To determine whether your mortgage broker is an advisor or an order taker, consider the following questions:

How much time do they spend understanding your financial situation? Advisors will take the time to understand your broader financial picture and goals.
Do they educate you about different mortgage options? Advisors will explain the nuances of different products, while order takers may just present the options.
Are they proactive in their communication? Advisors typically maintain open lines of communication, providing updates and advice throughout the process.
Do they offer personalized recommendations? Advisors tailor their suggestions to your specific needs, whereas order takers might provide a one-size-fits-all solution.

Choosing a mortgage broker who acts as an advisor rather than an order taker can significantly enhance your mortgage experience and financial outcomes. While order takers can process transactions efficiently, so can advisors. Advisors offer the personalized guidance that can help you make informed decisions and achieve your financial goals while also being efficient. When selecting a mortgage broker, look for one who prioritizes understanding your needs and providing tailored advice—your future self will thank you.

How to minimise your mortgage with an Interest Free Credit Card and an Offset Home Loan

Posted on 13/05/202413/05/2024 by Nick

Offset accounts can significantly enhance the financial benefits of a mortgage loan, especially when used in tandem with simple tools like an interest-free credit card. This article explores how coupling offset accounts with the clever use of interest-free credit cards can create a powerful saving strategy, particularly for those with substantial mortgage balances and good household incomes.

Understanding Offset Accounts

An offset account is a bank account linked directly to your mortgage that has the usual functionality of an everyday account such as being able to have a debit card, Apple/Android Pay, branch withdrawals and deposits etc. The money held in this account is offset daily against the mortgage balance, and interest is charged only on the net balance. It is important to note that the offset account itself does not earn interest – it offsets it’s balance against your home loan. For instance, if you have a mortgage of $1,000,000 and an offset account balance of $50,000, you will only be charged interest on $950,000. This setup can lead to significant interest savings over time, reduce the term of your mortgage, and increase your equity. Offset accounts are particularly beneficial as they provide flexibility in accessing funds, unlike direct repayments into the mortgage which may be less frequent and require a higher level of discipline to action each month.

Multiple Offset Accounts

There are a handful of banks and lenders who offer multiple offset account structures that enable you to aggregate the combined account balances against a single mortgage account. This is great if you like better financial control and have funds put aside for large bills, your children’s education costs, taxation provisions, savings for a holiday or any other purpose you can really think of. Multiple offset account structures are a great tool for both saving on interest and maintaining purpospeful liquidity for day-to-day needs.

The Role of Interest-Free Credit Cards in Financial Management

Interest-free credit cards have been around for a long time now and of course offer a period during which no interest is charged on purchases, typically ranging from 30-55 days. When used wisely, these cards can manage cash flow without incurring extra costs, thus allowing any spare cash to sit in your offset account for as long as possible, further reducing the mortgage balance subject to interest. The key to maximizing the benefit from interest-free credit cards lies in responsible spending and consistent repayment within the interest-free period. This ensures that all your available cash can remain in the offset account, working to decrease your mortgage interest obligations, without accruing additional debt from credit card use.

Using Offset Accounts with Interest-Free Credit Cards

Utilizing both an offset account and an interest-free credit card together can significantly amplify your savings. Here’s how to synchronize these financial tools effectively:

Direct Income into an Offset Account: Route all of your income directly into your offset account. This increases your average daily balance, which reduces the interest on your mortgage each month – this can have a powerful compounding effect over time.
Use Credit Card for Expenses: Use your interest-free credit card for daily expenses. This approach keeps more money in your offset account for a longer period during the month, maximizing the interest savings on your mortgage. There is of course the added benefit that many credit card companies offer customers frequent flyer points affiliated with the major Australian Airlines Qantas and Virgin – you may be surprised at how quickly you will rack up those frequent flyer points for your next trip!
Pay Off Credit Card From your Offset Account: Before the end of the interest-free period on your credit card (typically 30-55 days), pay the balance using the funds from your offset account. This method ensures you avoid interest charges on your credit card while keeping your offset account balance high throughout the month. Many credit card companies enable you to have an automatic sweep of the monthly balance due to automate and streamline the efficiency of paying the card bill on the very last day its due. This maximizes the benefit of the money in your control and minimizes the manual effort required to administer the money smart procedure.

Case Study: $1,000,000 Mortgage with an Offset Account

Consider a hypothetical scenario: a homeowner with a $1,000,000 mortgage at a 6.0% annual interest rate over a 30-year term. Suppose this homeowner maintains an average of $50,000 in their offset account and spends $3,000 monthly using an interest-free credit card, which they pay off at the end of each month from the offset account.

Calculation: Without the offset account, the monthly interest would be calculated as $5,000 initially ($1,000,000 x 6% / 12 months). With $50,000 in the offset account, the interest reduces to about $4,750 monthly ($950,000 x 6% / 12 months), saving $250 per month or $3,000 annually. Over the life of the loan, this strategy alone could save approximately $90,000 in interest.

So as you can see having a basic understanding of how offset accounts work and how they can help save your thousands in interest. Not all offsets are created equaly though as many lenders limit customers to only one offset (not multiple) or ‘partial offset’ arrangements rather than 100% offset so it pays to get qualified advice.

Offset home loans are typically marginally more expensive because of a slight loading on the interest rate charged or the fees payable so if you have limited monthly cashflows there maybe diminishing returns for having an offset account. Some loans in certain entities like trusts or companies or for expat / overseas borrowers are not always allowed to have offset accounts linked.

Overall offset home loans are a fantastic feature that may be able to help you pay off your loan sooner. Why not book a time with us today to discuss your needs and to determine if an offset home loan is suitable for you. We have over 30 major banks and non bank lenders that we can compare for you today.

Listen To Clinton’s Interview With The Real Estate Podcast

Posted on 06/03/202407/03/2024 by Clinton Waters

Household Income Homebuyers Surged to $220,000 – Clinton’s interview on Home Affordability!

Listen to episode #928 of @therealestatepodcast where Clint is interviewed by the shows host Craig. In this short 15 minute podcast Clint provides his expert insights on home affordability, interest rate forecasts, the surge in household homebuyer incomes, and the dynamics of sharing property ownership.

Should You Be Loyal To Your Bank?

Posted on 21/12/202321/12/2023 by Clinton Waters

When it comes to your money, especially a significant commitment like a mortgage, loyalty to your bank might seem like a good idea. Many homeowners tend to stick with their original lender out of familiarity, a sense of loyalty or sometimes because they think it’s too hard to change. However, the mortgage landscape is constantly evolving, regardless if interest rates are increasing, decreasing or going sideways and sticking with your bank probably isn’t always in your best interest – not that they will tell you this…

Is maintaining allegiance to your bank when you have a mortgage crucial? Or does prudently exploring better deals that align with your interests make more financial sense?

The myth of loyalty

The notion of loyalty to your bank is deeply ingrained in many individuals. Often, people associate familiarity and a long-standing relationship with their bank as a form of security. However, while loyalty may have its merits in certain aspects of life, it might not always pay dividends in the realm of your home loan and your hard-earned dollars.

New to bank = a better deal

You would think that being loyal means you should get a better rate or a discount like you do with your insurance company, but this is often not the case. While you might get a slight improvement by haggling with your old bank the overall system is hugely hungry for ‘book growth’, meaning banks and lenders will usually trip over themselves to get new customers in the door and rely on their ‘loyal’ customers to stay put at higher rates – it’s just the way the system often works. Even when you get your current bank to tweak your rate, there will come the point when the ‘computer says no’ because the return on their loan isn’t worth it anymore for a host of technical reasons – you might think you got a better deal, but did you?

You don’t know what you don’t know

Mortgage rates fluctuate regularly. What might have been a competitive rate when you initially secured your mortgage a few years back could now pale in comparison to newer, more favourable deals available in the market. By limiting yourself to one lender, you could potentially miss out on a better interest rate or more favourable terms offered by other banks and lenders.

Why reviewing your mortgage regularly is crucial

One of the keys to ensuring you’re not missing out on a better deal is to review your mortgage at least every one to two years. This proactive approach allows you to assess if your current loan still aligns with your financial goals and if there are better options available. You are probably unsurprised that banks don’t prioritise this process, and they are not obliged to always act in your best interest – licensed mortgage brokers are, however! This means you may be unaware of a better rate available from your current lender or someone else in the market.

This is where the expert mortgage brokers at AXTON Finance can help save you a lot of time and money. AXTON Finance is committed to empowering homeowners by regularly reviewing their loans with automated repricing tools that needle your bank or lender to ensure you get the best rate for your scenario. After all, if we are not doing this on your behalf, we are certain you will and that you may leave us! One of our primary goals is to create a long-term relationship with you as your trusted mortgage broker. We do not treat you as a once-off transaction!

Our efficient digital systems ensure that your mortgage is reviewed at least annually, ensuring that you are getting the best possible rate and terms that suit your needs.

Why AXTON Finance are Melbourne’s leading Mortgage Brokers

Unlike dealing directly with banks and online lenders, AXTON Finance is dedicated to working in your best interest. Our team of experienced mortgage brokers navigates the complex mortgage market on your behalf, identifying tailored structures and negotiating to secure lower interest rates and favourable terms.

We provide you with personalised attention, ensuring that your financial goals are understood and catered to effectively.

We build relationships – not transactions

While bank loyalty may have been a thing when 20th-century bank managers had authority, it’s now essential to recognise that in modern home and investment loans, blind loyalty to your bank might only sometimes serve your best interests. Regularly reviewing your mortgage and exploring better deals is indeed a smart financial move but getting experienced advice from the leading mortgage brokers at AXTON Finance will help ensure your best interests and not the banks are being served!

We know that your mortgage is not just a set-and-forget transaction but an evolving instrument that adapts to your changing financial needs. Don’t wait for your bank to offer you the best deal; take control of your financial future today. Contact AXTON Finance, Melbourne’s trusted mortgage brokers, and experience our personalised service, efficient systems, and dedicated team, who can help you secure a better mortgage approval.

Five Reasons To Refinance Your Home Loan

Posted on 08/02/202302/05/2023 by Clinton Waters

With interest rates set to continue to increase in early 2023 it has been in the news everywhere that you should be looking at ways to save money in your daily budget and one of the biggest savings that can often be had will be looking at your current mortgage rate. While you should always call and haggle with your current lender we often see customers paralyse themselves with choice and end up comparing apples with cantaloupes which can end up with a borrower making a poor decision.

Take a look at these five reasons to refinance your home loan and reach out to us to discuss your options or book a free mortgage review meeting with one of our professional team online here – most meetings usually takes only 15 minutes to provide you with some tailored advice.

Five reasons to consider refinancing your home loan;

Lower Interest Rates: Of course one of the main reasons to refinance your home loan is to take advantage of lower interest rates. If interest rates have dropped since you first obtained your mortgage, refinancing to a lower rate can result in significant savings on your monthly payments and overall interest paid on the loan.
Cash Back Offers: Many banks and lenders in Australia are currently offering cash-back incentives for refinancing your mortgage. These cash back offers can be significant up to $5,000 and can provide a welcome injection that can be used to pay off high-interest debt, make home improvements or even to go on a well-deserved holiday. It’s important to check with different lenders to compare the cash-back offers and weigh them against the potential savings of refinancing.
Consolidate Debt: Refinancing can also be used to consolidate high-interest debt such as credit card balances or personal loans. By rolling these debts into your mortgage, you can often lower your interest rate and simplify your monthly payments. There are some catches with doing this which can extend the total cost of your lending structure so it pays to get some professional advice before you do this.
Switching to a Different Type of Loan: There are many different types of home loans available in Australia, such as fixed-rate, variable-rate, and interest-only mortgages. Refinancing allows you to switch to a different type of loan that may better suit your current financial situation or goals.
Accessing Equity: Finally, refinancing can also be used to access the equity in your home. This can be done by either increasing the size of your mortgage or by taking out a separate home equity loan or line of credit. This can provide you with the funds you need for home renovations, investments, education fees, or other expenses.

It’s important to note that refinancing a home loan is a big decision and should not be taken lightly. It’s important to consider the costs associated with refinancing, such as application fees, legal fees, and lender’s mortgage insurance, and weigh them against the potential savings. It’s also important to shop around and compare rates, cash back offers and fees from different lenders before making a decision.

Why not book a time with one of the experienced team at AXTON Finance today – you have nothing to lose other than maybe years off your mortgage.

Book an online meeting here with one of our professional brokers.

Rates On The Move

Posted on 14/02/202202/05/2023 by Clinton Waters