Is it normal for mortgage brokers to request very detailed scanned copies of document just to give you a rate and fees and products recommended? I mean I've seen other brokers who just gave me the rates CBA is offering but this one says they need driver licence, bank statements, payslips etc. to do price request. this normal?
Mortgage Broker Requesting Info
Thenarrator on 29/08/2017 - 19:46
Last edited 30/08/2017 - 09:34 by 1 other user
Last edited 30/08/2017 - 09:34 by 1 other user
Comments
It seems like the broker wants to get a pre-approval by doing a credit check.
If the check comes OK, then the Bank might give you a better interest rate.
Every bank wants a customer that pays on time and throughout the full duration of the loan.I asked whether it is for pre-approval. They said its not because pre-approval needs to have me informed and given them a go ahead. This is just to get a rate check with products thats tailored to me.
I can assume that Broker requesting payslips because to check your average pay and overtime or commission or bonus if you have any. Some bank doesn't take overtime or commission or bonus 100% in servicing. Bank Statement to check genuine saving may be. And Licence to check your credit score may be. Source: I am Mortgage Broker
But do you really need these info just to get a rate? (or should I reword it in another way to say, do you really want to spend all that effort knowing the customer might not go with your package).
Unless you are certain you are going to go with them, i wouldnt provide that kind of information to a broker personally.
Not certain atm, just comparing rates in order to decide which broker to go with. They're not giving rates for me to know whether theyre any good.
Then you have your answer, it seems to me these guys are trying to make it so you have no choice but to go with them, since you are so far along the process and you have already put it most the effort, that you will just think its too much effort to go with someone besides them.
So its a strongarm tactic by them to get your business.
Whilst it's impossible for us to say for certain why another broker is taking a certain approach to requesting substantial information upfront, we can say for certain that best practice dictates that a broker takes an extremely detailed look at an enquiry's circumstances before making any comment on pricing, borrowing capacity or requesting an ad hoc rate quote. This is for two reasons:
- As John Kimble said in an earlier comment, it is a requirement under KYC (Know Your Customer) rules and the NCCP Act (a broker must have a reasonable basis for making any recommendation).
- It is becoming the new normal for lenders to request this (example here). Their rationale is the huge amount of loan fraud that has occurred in the past 24 months coupled to APRA concern over the quality of credit assessment standards.
As such, long story short, despite this looking like an inconvenience it is actually a win for all concerned because each party is more likely to get the best possible outcomes vis a vis:
- The enquiry gets accurate indications of price/options
- The broker is seeing source material to ensure accurate information is being used (yes, as funny as it sounds, a lot of people incorrectly assess their own income/budgets/financial position) and their efforts are being expended efficiently
- The lenders (and consequentially regulators when they audit lending practices) are kept happy because KYC/compliance best practices are being used and this breeds for a more stable financial system.
Hope this helps.
@naritas: Who does it benefit to provide all this information to the broker ? Is it best practise cause it helps the customer, or does it in fact help the broker, who now has all your information. If you have to provide all this info to every broker you talk to, its alot of work for the customer, just to get a slightly better rate ?
If a broker cant give me information without me providing proof for every single piece of information required to get the loan in the first place, then that broker is not worth contemplating using. That means they are making your life more difficult and is being a pain in the ass.
I dont care what they use to justify this, but personal information should not be provided or be required to be provided till you choose the broker you wish to use, i am a private person, i dont wont every broker in australia to have my payslips/passport/drivers license. Let's say their database is breached and all your information is leaked. Why would you want to take this risk that becomes exponentially worse for each broker who has this info. Best practise for the industry, or best practise for the customer. They are both conflicting.
Perhaps your dis-satisfaction may be coming from the fact that you may be confusing concepts to do with general product information vs. recommendations to do with products and ad hoc pricing.
The OP asked:
Is it normal for mortgage brokers to request very detailed scanned copies of document just to give you a rate and fees and products recommended?
and
this one says they need driver licence, bank statements, payslips etc. to do price request. this normal?
The answers to those questions, in our humble opinion, is 'yes'.
Contrast this with a situation where an enquiry simply wishes to know some general information about the price of products , what the broker's bona fides are and what is out there, that information should not require you to do any detailed disclosure of your circumstances. Furthermore, nearly all brokers have this kind of information on their website. It is also freely available on the internet.
So to be clear: If you want a specific comment on your circumstances (such as product recommendations), especially ones that entail making a formal pricing request (NB: for many lenders the best rates on offer are tailored to the specifics of the application) or assessment by a lender - both the law and industry best practice require an in-depth assessment of circumstances and identity. Brokers that are not doing this are, at best, not adhering to industry agreed best practice and, at worst, blatantly violating the applicable financial services laws.
Hope this helps.
EDIT: If your concern is specifically providing scans of ID, etc as opposed to simply providing the details in writing (such as driver's licence number, DOB, legal address, etc) - scans are not mandatory at the very beginning of the process UNLESS there is some cause for concern that the applicant is considered an elevated risk for a compliance/regulatory concern. Which, ironically, you will probably get yourself classed as if you act in a manner to hide such information.
Seems a bit much to ask for drivers license and such; but payslips and proof of sources of income I understand. I know brokers who can spot "potential" earnings/income that I never thought of from the information given and present a more favorable position to the lenders. There are brokers and there are brokers.
Some lenders are tightening up as some brokers/agents have been fudging details to get their commission.
What he has asked for seems fine, just watch what you sign… If in doubt drop the pen."Some lenders are tightening up as some brokers/agents have been fudging details to get their commission."
That's why all of the Banks need a Royal Commission.
Broker here.
I generally don't provide quotes or pricing to a client without having payslips, tax returns, ID etc on file.
Why?
Firstly, banks lending criteria has become much stricter over the past 12 months, and not everyone will fit with every banks policy. I don't want to suggest ING if you're not going to get approved there.
Second, by providing me this information you're taking steps to begin a relationship. I won't spend time on people that just want pricing, there are comparison sites for that. The service (good) brokers offer is far more than just price.
Yes but you can "verbally" confirm your interest rate to the customer rather than have it in writing.
That way, the person seeking finance(re) has no documentation to prove the quote. NAB is very good at this.
Comparison sites are rubbish and it is only very abstract. Banks offer interest rates much less than advertised.
It's all a game with numbers.
"The service (good) brokers offer is far more than just price."
Do you mind me asking you, and I assume that you do get a trailing commission after a successful finance with a customer, do you try to get a better deal periodically (eg. 6 monthly, annually) with that same customer or continue to earn a passive income until they leave to another lender?
Regardless of the percentile of your trailing commission.
Regards
I'll happily give a rough indication of rate based on the transaction (investment or owner occupied, P&I or interest only etc), but there are many factors that dictate loan suitability for a client.
Getting that information upfront is best practice and ensures you're not wasting yours or the clients time.
I monitor the market and track all of my clients loans. If a substantially better option is available I will inform the client, and try to get their current lender to match through retention pricing.
If this is not possible, I may recommend refinancing. This is based on benefit to the client - I do not consider my trail or commission in the decision.
but a person would want quotes from several brokers. Isnt it bit risky to be sending all that info to several brokers knowing u might even go with them
but a person would want quotes from several brokers
I think this is exactly what the brokers don't want you doing. Referenced by sweefu's comment:
I won't spend time on people that just want pricing, there are comparison sites for that
Seems fair to me. If you are still at the stage of running between brokers getting pricing then I would consider you a tyre-kicker too.
I don't think there is much risk in sending that info.
We as brokers have very strict compliance & data handling requirements. For example, I run a totally paperless office. All client information is stored in a Secure CRM which is managed by my aggregator. All TFNs are automatically removed from documents when they arrive.
While I understand wanting to get quotes from several brokers, this approach focuses solely on interest rate.
I would instead meet with several brokers, have a coffee, and get an understanding of the way they work / discuss process and structure.
From there I would commit to one person, and start a conversation about rates. There generally won't be much variance in the rates each broker can achieve - but brokers (on occasion) will claim to have "exclusive rates" for promotion.
Cheers
Interest rate is only one factor of the transaction. If you want the cheapest rate, go to online lender such as ubank
It's best practice customer verification/KYC procedure. If you're not comfortable providing it, don't.