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In this edition of Money Minute, we talk about mortgage brokers and best interests duty - what best interests duty is, why it's important and how it protects you, as a borrower.
Your needs come first
Best interests duty is a legal requirement that applies to mortgage brokers. The law is designed to protect borrowers by saying that brokers must put their clients’ needs first.
How do we do this? By taking time to understand your situation in detail, as well as your needs and goals. We then find a match with suitable bank loan products.
Best interests duty does not apply to banks
What a lot of people do not know is that best interests duty only applies to mortgage brokers. It doesn’t apply to banks.
You read that right. Despite the banks being raked over the coals for misconduct by the Banking Royal Commission, banks are still able to recommend their own products as your best loan option, whether that’s really the case or not.
"Despite the banks being raked over the coals for misconduct by the Banking Royal Commission, banks are still able to recommend their own products as your best loan option, whether that’s really the case or not."
Chris Jonson, My Finance Agent
Give yourself more options
Some people prefer dealing directly with their bank, which is understandable. They feel like it's more efficient or it keeps their finances simple.
The issue, however, is that you effectively reduce your options because the bank will only recommend their own products. That leaves you to either accept the bank’s recommendation or go out and do the research yourself to make sure you really are getting the best deal.
Unlike bank loan officers, mortgage brokers are legally obliged to consider all of your options and carefully justify their recommendations.
Not only does this broaden your options and save you time, but the service is absolutely free. We get paid by the lender and only after your loan settles.
Value of independent eyes
Aside from doing the research and managing the loan application, approval and settlement processes for you, there’s another good reason to have an extra set of eyes involved. And that’s to make sure you get what you signed up for.
An example of this is ASIC’s current lawsuit against ANZ. ASIC is suing ANZ because they failed to provide certain loan benefits to more than half-a-million customers. The missed entitlements add up to around $200 million.
As mortgage brokers, we don’t just close your file when the loan settles - we check and monitor to make sure your loans are in good hands and operating correctly.
And again, it’s all part of the My Finance Agent service and absolutely free!