As borrowers dive into the unpredictable waters of 2024, mortgage brokers are the savvy navigators steering them toward financial success.
Australian Broker asked three mortgage brokers to not only shed light on their top recommendations for borrowers this year but also uncover common misconceptions that could trip up the unaware.
The year of 2024 will go down as one of consolidation, according to Adele Andrews (pictured above centre), director of Australian Property Home Loans.
“I’m always saying to people that they need to reach out to an expert to review if there is a better way to structure your debt,” said Andrews.
“Can you leverage from a high valuation on your property and bring those personal loans, credit cards, and car loans down into one product with a lower rate? That’ll be the number one question by the end of the year.”
Andrews second point is designed for prospective homebuyer clients: “If you are looking to buy property – prepare. It is going to be hot out there!”
“Brokers should urge clients to ensure they have a fully assessed pre-approval with a lender who has maximised their circumstances,” Andrews said.
“An experienced mortgage broker should ensure the client has explored all options, have workshopped all possible scenarios and know that you have taken away the best possible option on the market that is available.”
Most importantly, Andrews said clients must understand what their repayments will look like and how they will impact their budget and lifestyle.
“I always say it’s important to land in a comfortable place and be in control of your money. Have a good team of professionals to support you throughout the process – so much can go wrong, don't put yourself in a vulnerable position.”
Andrews’ third recommendation for other brokers to give their clients is ensure they know how to create a “great baseline” for their mortgage.
“Reputable brokers should run a pulse check and ensure they have the best rate and loan structure for their client,” Andrews said.
Switching it up from the top three tips, mortgage broker Nick Clunes (pictured above left), director of The Lending Lab, said identifying the common misconceptions among borrowers could be a good way of helping clients and understanding their frame of mind.
Here is Clunes’ top three:
“I believe the most common misconceptions around mortgages and the home buying process are primarily product related in terms of offset versus redraw,” said Clunes.
“Many people don’t know what types of products are available which could potentially mean saving years and thousands of dollars on their home loan if used correctly.”
Clunes also believes the home buying process is “not very well mapped out” for borrowers.
“It is one of our goals to work on this and to build a video series dedicated to walking people through the different stages of buying a home,” Clunes said.
“Us brokers need to approach this with empathy and tact as it’s easy to forget how overwhelming it is, especially when purchasing for the first time.”
In terms of existing borrowers, Clunes felt the main misconception was not knowing where to turn when they're looking for an additional property and their bank has told them it's not affordable.
“There’s plenty of options out there – you just need to know where to look,” said Clunes. “As brokers, we need to position ourselves as the expert guides that will walk them through this often-confusing market.”
“This could involve discussing diversification options, such as commercial property or the benefits and pitfalls of SMSF lending for example.”
Finally, Chris Foster-Ramsay (pictured above right), principal broker at Foster Ramsay Finance, explained what he had been sharing with his clients.
“Ring your broker, banker or lender and negotiate the best deal for your circumstances. Home loan rates and deals change almost weekly, and every lender wants to keep your business,” Foster-Ramsay said.
“Don’t remain loyal for the sake of it, it could just cost you more money.”
“Frollo will become more of a player in the budget app space, because of links it has to the new open banking source data rules and regulations,” Foster-Ramsay said. “Also check out Spriggy, Beem, and Shopback.”
Give your bank account attention on a daily basis to ensure you’re in full control of your money,” Foster-Ramsay said.
“You need to know what’s coming and going to quickly remedy any unknown charges.”
What’s your biggest tip to borrowers? Comment below.
