The questions to ask a lender – Andrew Mirams

Knowing the right questions to ask is more important that knowing the answers. That applies, in particular, when you are in negotiations with a financier. Andrew Mirams will explain today and give you the questions to ask.


Kevin:  You know, sometimes it’s not about knowing the answer to questions; it’s knowing the questions to ask. I guess no truer word would be said then that when it comes to arranging your finance. Sometimes it’s a matter of knowing what questions to ask about the loan before you commit – certainly well worth doing. Joining me now, Andrew Mirams from Intuitive Finance.
Andrew, I’m putting you on the spot here a little bit. What are the questions that you think borrowers should be asking you before they commit to a loan?
Andrew:  Thanks for having me, Kevin. Look, I think, it really is quite specific and dependent on the client sitting in front of you. Obviously, a first-home buyer’s question is going to be quite different to an astute investor or someone who’s probably done it before, etc. But I think some of the real keys that they need to ask or that they need to know is who are they dealing with first across the desk? Are they in industry bodies and things like that, etc.? What’s their experience, etc. — along those lines?
Kevin:  This is the broker you’re referring to?
Andrew:  Absolutely. Yes. We get lots of questions. We actually get quite upfront with the information we give out to our clients or potential clients about us. We’re very active on the Internet and things like that.
So that people get a good feel of who they’re dealing with. Have they done it before? But then, I guess, for them more specifically, it’s who are we dealing with and the whys? And the real whys is we’re pretty intent here on making sure people really understand the process. Again, that comes back to whether you’re a first-home buyer or you’re a astute investor.
Kevin:  Quite often, Andrew, a lot of the lenders will be hybrids of other major lenders, so it’s a matter of knowing who you’re actually borrowing from, as well.
Andrew:  Yes, exactly. You need to be intent on making sure if you’re recommending ABC Bank over XYZ Bank, why are we doing that? And then you need to drill down. So for first-home buyer, it might be a lower mortgage insurance premium. It might be for an investor that they have a better fixed rate or a blend or a split rate, or there might be more features in the loan that we think based on the data we have that that’s a better fit for them.
We encourage the questions because it’s only when they’re really comfortable with the process that they’ll understand it now and also in the future.
Kevin:  What sort of disclosure do you as a broker have to give before someone commits to a loan, Andrew?
Andrew:  The rules have a changed a lot. We’re probably ten years behind the financial planning industry but we’re correlating down that path. We all now have either all brokers who operate under their own license or under their aggregators or who do they do business with under their license. We’re bound to give out a credit guide, which discloses our dispute resolutions, the top six lenders we deal with, how we’re paid, etc.
We also then make sure an information pack based on Intuitive Finance and Andrew Mirams goes out so that people know who they’re dealing with or has some comprehensive. Again, most of our leads or deals tend to come from a warm referral, so they’ve been referred by a friend, a family member, or someone who’s done business with us, another business partner, etc.
We give that sort of information. We are active in giving out a fact-find and making sure that people understand how they know that their data that they give us is also going to be protected. I think that’s very important in the modern day. People don’t want their privacy breached, as well.
Kevin:  That’s a very good point you make actually about the information you give the broker because you tend to think that you’re giving it to the bank but you’re actually pushing it through the broker, and I guess you’d have to be fairly careful about how they use that information, too, Andrew.
Andrew:  Correct. Again, it comes back to knowing who you’re dealing with. And we ask for a quite exhaustive information and research list right up front. We think that’s the best way to best assist the client in the least amount of time because by the time someone’s ringing us, e-mailing us, sitting in front of us, they don’t want to be sitting and umming and ahhing; they generally have a need and they want that need satisfied.
So for us to best assist them we think the more information we can, one, give out, but two, then get back, it helps us to do a better client deal in terms of what everyone gets from that.
Kevin:  Has consumer protection been beefed up in recent times in terms of how consumers deal with brokers and what protection they can get?
Andrew:  Yes. There’s a group called COSL, which is the Credit Ombudsman Scheme. Probably what you find against brokers and things like that, I think that the disputes or the complaints are lessening, so there was less last year than the year before.
I’ve known lots of people who have made a complaint because someone’s maybe recommended a fixed rate and they didn’t understand why. Again, it just keeps coming back to that why question. Keep asking the questions. But certainly, your money day lenders and things like that, they tend to get significant complaints and things like that – Office of Fair Trading, COSL, and all that sort of thing. It just depends how the promoters…
The legislation, and the regulations have tightened dramatically since the GFC and I think it’s a great thing for the industry as a profession.
Kevin:  Yes. You mentioned the payday lenders; they’re the real rogues of the industry. Well, I suppose that’s unfair to label them all like that, but they certainly don’t have a good reputation, do they?
Andrew:  No. They’re really servicing a need but the client who has that need is probably chasing from paycheck to paycheck, and you tend to see a lot of people actually just get themselves into more problems and troubles.
Unfortunately, trying to protect people from themselves… Desperate people do desperate things and when they think they’re in that situation they go to what they think at the time is a good thing but quite often is not.
Kevin:  Just to round out this conversation, too, Andrew. Sometimes attractive interest rates, they may be attractive in the short term but I guess you have to look long term. It could just be a little bit of bait to get into the loan to start with.
Andrew:  Absolutely. And that goes everywhere. We’re really active here in making sure we meet the client’s need first and then balancing that with features and interest rates and things like that.
If someone comes to me and says, “I saw this 3% interest rate advertised. That’s what I want,” and they don’t qualify, well there’s no point competing on rate because you can’t. So you need to make sure you’re going to be able to secure the client the money that they need for that purpose and then you work backwards with features.
It might be an offset account or redraw or a fixed rate or a line of credit attached to a credit card. They might need the whole banking package. What are the rates and fees that go with that as well as the interest rate? You might get a slightly cheaper interest rate, but if you pay mortgage insurance, there might be a significant increase in the premium that counterbalances that.
Kevin:  You talk about low interest rates. I remember that saying “The only free cheese is in the trap.”
Andrew:  Couldn’t agree more.
Kevin:  Andrew Mirams from Intuitive Finance. Andrew, great talking to you and thanks for your time.
Andrew:  Thanks, Kevin.

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