Home Loans / Mortages: Are All The Lenders / Brokers Crooks?

Lbweiss on 08/04/2021 - 23:40
Last edited 08/04/2021 - 23:40

I've just gone through the process of applying for (and getting) a home loan. It's been one of the most painful processes that I've encountered.

It really makes me think the entire industry is corrupt.
It seems that none of the lenders / brokers will give you real information in writing, they just want to chat on the phone, and talk about how they don't charge you any annual fees etc. Then when they send the paperwork through, of course they don't charge an annual fee, they charge 12 monthly fees instead (hello Westpac / HSBC).

In the end I took three different lenders through to valuation, with a difference of 10% between the valuation estimates.
The lowest valuation just happened to come back such that it just nudged my loan over the 60% (i.e. 60.1%) LVR threshold for 'penalty interest'.

It really seemed that most of the 'consultants' that contacted me couldn't read the emails I sent, and had weirdly bad hearing. Like when I specifically told them on the phone that as I mentioned in the email, I did not want to have a linked offset account.. only to then obtain the contract documents with a mention of how I really wanted the linked offset account for an extra $10/month.

Perhaps there really are some good lenders/brokers out there… but my current sample size of about a dozen doesn't suggest this to be the case.

Is the general consensus that they are as corrupt / incompetent as my experience suggests?

Poll Options expired

  • 23
    Yes
  • 18
    No
  • 1
    No (but I have a conflict of interest since I'm involved in the business)
Financial Home Loan Loan

Comments

    • bweiss on 08/04/2021 - 23:44
      +4

      That doesn't need a poll option, because you should just stop reading and go elsewhere… obviously if you stick around to the poll option section, then you do indeed care.
      Heck.. you even cared enough to post a menial comment.

      • deme on 08/04/2021 - 23:45
        -7

        Heck.. you even cared enough to post a menial comment

        Ditto

        • bweiss on 08/04/2021 - 23:50
          +1

          Umm… I cared enough to post an entire topic on it.
          But by all means if you truly "don't care"… there are other places you could go..

          • deme on 08/04/2021 - 23:50
            -4

            @bweiss: 🤦‍♀️

            • iNeed2Pee on 08/04/2021 - 23:54
              +1

              @deme: No need to be rude?

              They are posting a question on a forum. You have also done the same previously about things like Do you think you are smart? and Why do you smoke?

              • deme on 08/04/2021 - 23:55
                -4

                @iNeed2Pee: Despite my best efforts this forum post is worse than mine.

              • SF3 on 08/04/2021 - 23:56
                +2

                @iNeed2Pee: “victim turned perpetrator”.

    • Donaldhump on 08/04/2021 - 23:46
      +1

      Why did you read it

      • deme on 08/04/2021 - 23:47
        -4

        Expected a good forum post

  • SF3 on 08/04/2021 - 23:45
    +1

    Sounds like you want a Royal commission into lending…

    • iNeed2Pee on 08/04/2021 - 23:55
      +3

      I would like a Royal commission into Royal commissions.

      • bweiss on 08/04/2021 - 23:59
        +2

        That should possibly be a coronial inquest into royal commissions… since I think most of them have died in mysterious circumstances.

  • iNeed2Pee on 09/04/2021 - 00:07
    +2

    I too also found Brokers to be shit. Yes, it took out the hassle of submitting all the paperwork but after sending all of the required documents to them, I honestly could have done it myself. (Which I did in the end).

    I was recommended a few brokers, all of which were overrated imo.

  • garetz on 09/04/2021 - 01:06
    +2

    The system is structured in a way that good brokers get priced out of the market, while the shoddy brokers are making the money on the extras that they upsell you without you even noticing.

    The only reason they add extras is that they make money off of that themselves, so its not that they are hard of hearing or ignoring you, they are purposefully trying to get you to agree to the extras so they can make extra cash.

    • bweiss on 09/04/2021 - 01:26
      +2

      But is it really 'upselling' when they're specifically going against the client instructions?
      I.e. when all discussions have been "I do NOT want an offset account", but the offset account keeps making its way back into contract revisions (revisions intended to ostensibly fix some other issue, like they made a mistake on the term, or the split, or the loan amount)… Is this not corrupt business practice?

      It seems like they are consistently trying to sell me on a product unsuitable to my requirements. Maybe it is just genuine mistakes… But they seem awfully consistent in how those mistakes fall.. always being a greater loan value, a higher LVR, a longer term, unwanted optional extras.

      • garetz on 09/04/2021 - 01:39
        +1

        Everything you mentioned is what makes them more money, its intentional, alot of people do not read the finer points and fall for it. Just be vigilant and you will be fine.

      • boostpak on 09/04/2021 - 09:06
        +1

        brokers always do that type of shit, puts me off them

  • bargain huntress on 09/04/2021 - 01:57
    +3

    They are middle men

    The middle men of the world are generally corrupt because they are fundamentally useless

    Avoid using middle men as much as possible

    Can you not apply for these things more directly?

    • Peter Enis on 09/04/2021 - 15:17

      Upvoted for use of capitalisation. You found the shift key!

      • bargain huntress on 09/04/2021 - 15:33

        I am on my phone - it has autocorrect
        Lowercase happens on my computer

  • Trying2SaveABuck on 09/04/2021 - 06:43
    +1

    Dont use a broker?

    depending on your situation applying for a home loan is F**ken easy you literally need to fill in a few forms, ID, a few pay slips and proof you got the deposit in the bank

    then sign a contract the lender does the rest…..

    If the broker tells you that they are 'free' then they are not working in your interest and if you paying someone 3-4k to do the job for you i honestly couldnt understand why!?

    Perhaps if you run a small business and need a low doc loan but otherwise jump on canstar pick the lowest rate that meets you criteria and apply

    • bweiss on 09/04/2021 - 16:30
      -1

      Without a broker how would you get access directly to the lenders though? The independent lenders don't seem to be accessible other than through brokers.
      And the bank rates weren't very competitive (UBank seem to have the best advertised rates, but they have quite a few limits on their risk… ie no units / apartments).

      • Trying2SaveABuck on 09/04/2021 - 20:44

        As i said Canstar
        Filter from lowest compaision rate

        Click apply

        • bweiss on 09/04/2021 - 21:38

          That shows Reduce Home Loans as the lowest, they are a broker.

          In fact all of the low end of that list are brokers until it gets to Hume Bank and UBank at ~2.34%

          So it doesn't seem Canstar is really the answer to avoiding brokers / banks.

          • Trying2SaveABuck on 09/04/2021 - 21:57

            @bweiss: In a 45sec search Ubank 2.34%CR - 5 year fixed is 2.33%

            Athena 2.19%

            Tictoc 2.2%

            Loans.com.au 2.16%

            Going to say they all look like decent deals to me but again that is just 45seconds

            I didnt need a broker ….

            Not 100% sure what you expect

            • bweiss on 09/04/2021 - 22:05

              @Trying2SaveABuck: I had applied with both Athena and Tic:toc, from the doco I got from Athena they appeared to just be a broker. But they do appear to have a credit licence, unsure in what conditions they support the loan themselves though.

              Tic:toc just go to Adelaide/Bendigo bank, so less a truly independent lender, and more of a broker also.

              Loans.com.au are just a broker (from my experience), they also offered Adelaide/Bendigo bank as the official lender.

              Maybe direct to Adelaide/Bendigo bank is the way… But I never see them offering rates direct (i.e. they don't make the list in Canstar)

              • Trying2SaveABuck on 09/04/2021 - 22:14

                @bweiss: Once again im not sure what you are after even the big banks have to go to 3rd parties when giving out loans for either funds credit checks etc

                Mortgage brokers offer a wide array of loans usually because they get big kick backs for selling these loans

                Companies like Athena just give you the best rate (or close to as possible) without any of the bullshit - cutting out some of the middle man/overheads and passing those savings onto consumers

                I was with Ubank for years they were fine - they are owned my name they used another 3rd party to source to money - do I care? No i filled in my paperwork got approved and thats it….it doesnt matter where the money comes from as long as the money is there on settlement day…

                You're probably not going to get better then the low 2s as it is likely interest rates will edge higher (even if the cash rate doesnt increase) - note - i dont know your situation

                But sounds like you're either looking for a unrealistic deal or your situation doesnt allow you to access this low cost loans - either or a broker wont help you

                • bweiss on 10/04/2021 - 12:21

                  @Trying2SaveABuck: My complaint was never 'the interest rates are too high'.. it was the deceptive practises that the brokers/banks appear to be using to overcharge the customer.

                  If the standard rate is 2% or 10% I don't care.
                  But if the interest rate is artificially inflated because of some bullshit lowball valuation, or I'm charged extra for 'features' that I specifically said that I do not want, then this seems like corruption. And that doesn't seem like something that just deserves a shrug and a "that's how it is"..

                  UBank have seemed the better on the bank side, but since it's an apartment, then it doesn't fit their risk criteria, and they won't lend for it. That's frustrating, because they would have been my preferred choice, but I can't argue with their logic. UBank are of course backed by NAB, since they are just a subsidiary of NAB (but a 'low cost, low touch' subsidiary).

                  I'm pretty happy with the rate that I got. My complaint is how painful it was to cut through the bullshit, and the deceptive practises to get to this stage.

                  Perhaps it's the communist in me coming out, but it does seem like something the government should be regulating a little tighter. Perhaps having a required format for PDS, and limiting the ways that charges can be applied (or at least advertised). Surely being allowed allowed to advertise as 'no annual fees' whilst imposing monthly fees, is a bit silly. Now obviously it works, because people are too dumb to read the fine print… but we have workplace law to protect dumb people from harming themselves physically… why not similar to prevent dumb people from harming themselves financially…

              • miwahni on 10/04/2021 - 02:13

                @bweiss: Loans.com.au aren't a broker, they're an online retail mortgage provider. They can't put you with other banks etc, they use their own funding. Owned by Firstmac.

                • bweiss on 10/04/2021 - 12:08

                  @miwahni: Sorry you're right, I was thinking of homeloans.com.au instead. And I can't find the official lender document showing that it was Bendigo&Adelaide Bank they were using anyway.. but certainly for lots of the other lending offers the actual finance was coming from Bendigo&Adelaide Bank..

              • miwahni on 30/05/2021 - 00:18

                @bweiss: just for the record loans.com.au is owned by Firstmac (the third party lender) and has no affiliation with Adelaide / Bendigo Bank. All funding comes from Firstmac.

  • onetwothreefour on 09/04/2021 - 06:55
    +4

    I used a broker for my first (and only) home loan. Whilst it was probably easier I realised after 2 years when I went to refinance my loan that it wasn't that difficult to do it myself and I could also find a better rate than the broker.

    • [Deactivated] on 09/04/2021 - 07:43
      -1

      A broker is only really of use when you don't know what to do yourself.

      You can directly apply to banks for a mortgage. But if you're in a tricky situation (hold a work visa, self employed, for example) or want to do something non-vanilla (knock down rebuild) and don't really know how to go about applying for a product that suits your circumstances then, yes, a broker can help.

      • onetwothreefour on 09/04/2021 - 09:10
        -1

        Yes, I agree, I think I only did it through a broker as we'd never applied for a home loan before so thought it would make it easier, which it did, but in hindsight I probably didn't need to use them.

  • QuicheLorraine on 09/04/2021 - 08:26
    +1

    We used one of the brokers who frequently posts on OzBargain and have found them to be very average. Serious lack of communication, no attention to detail and seems to do as little as possible. I feel sorry for the few good brokers out there that do a great job.

  • Traveller107 on 09/04/2021 - 09:51
    -1

    Always avoid brokers. Banks will always do everything in writing via email. Better direct service, fast turnaround and same or better rates depending on your relationship with the bank.
    What is this 60.1% penalty interest you're taking about?? Usually LMI kicks in over 80% is that what you mean?

    • bweiss on 09/04/2021 - 16:28

      Lenders typically stagger their offered rates based on LVR. The lower the LVR, the better the offered interest rate.
      I put in requests with numerous banks also (CBA, Westpac, NAB, HSBC). I'm a Westpac customer, I went through their online home loan application process… it still resulted in a phone call from someone that proceeded to ask me all the questions I'd already answered in the form, and then to send me an application pack which contained entirely incorrect options from what I had advised over the phone, and via the online application.
      Banks didn't seem any better, and ultimately didn't provide as competitive interest rates as independent lenders.

      LMI is a whole different thing of course, and isn't "interest".

      • Traveller107 on 09/04/2021 - 16:43

        Yep I am aware of how lmi and rates work based on lvr, just couldn't understand what you were referring to as "penalty". So technically you're unhappy for not getting the extra discounted rate for 60% lvr?Nonetheless you need to find yourself a direct contract at the bank and negotiate better. Don't waste time on the phone. Book An appointment and go see the lender in person if you can. Makes a big difference as you come across as a genuine prospective client and can establish a better relationship. For new clients especially they can push their rates down well despite of your lvr. Whats the best rate you've been offered? Which city are you in I might be able to recommend someone.

        • bweiss on 09/04/2021 - 16:51

          I'm in Melbourne, I've currently got a 1.99% variable rate (2.06% comparison).

          My concern with that lender was that their valuation came back incredibly low, such that it put me just over the 60% threshold. Which seems suspicious. All the other valuations that I had were $30k more than this particular lender (one was +$35k, the other +$55k).

  • nephilim on 09/04/2021 - 22:30

    Most of the brokers we spoke to were aligned to the big4 here in SA, which was useless when credit unions had better rates (3 years ago).
    I rang around and made the deal myself. It was actually kinda fun, asking HSBC and random banks if they were good enough for us.

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