Will I be able to raise the mortgage bond I need?
"For most people, the daunting first step when they're in the market to buy a property is: will I be able to raise the mortgage bond I need?
There are two smart reasons to seek the services of a bond originator such as an evo person:
1. They'll set you up with the forms and checklists that give you the best chance of achieving the mortgage bond you seek; and
2. Then they'll do all the legwork, submitting your application to up to nine lenders to get you the best rate possible.
Often, they will be successful where you might have failed had you applied on your own. And almost always, the best rate you're offered will be better than you would have achieved had you gone direct to potential lenders.
This is true even for private banking clients: while your personal banker absolutely has your best interests at heart, they cannot look around at competitive offers to get the best deal for you.
Bond originators represent a massive saving of time and effort for you. There's one set of forms you have to fill in; one set of supporting documents you have to supply; and the input of the evo consultant yto help you make a decision once the offers come rolling in. You never even see the bulk of the red tape.
Yet, as the client, you pay no fee for this service.
WHAT'S THE BUSINESS MODEL?
In a nutshell, the service naturally needs to be paid for, but it's the bank who pays. The fee exists completely outside any rate your bond originator will be negotiating for you.
So: why would the banks do that? In the relationship of lender and borrower, banks hold most of the cards - so why would they incentivise third parties to broker this kind of relationship?
Firstly, banks are only as successful as their customer base. So a bond originator who brings good new customers to the bank is a good friend to that bank. But since the originator is working for the borrower, not the lender, it's in the bank's best interests to be a good friend too. Banks and bond originators get to know the other well, and those relationships make life easier for the banks, and increase your chances of success, and of being offered a competitive rate.
Secondly, it's logistically easier for banks to work with a professional who knows what is needed and how to present it. Applying for a mortgage bond is something most people will do only once or twice in their life, and we don't know the system - which, anyway, varies from bank to bank. Your evo consultant knows the ropes, and submits the application to each bank according to their individual systems. Effectively, they do the bank's admin for them. That's why the bank can pay them a fee and still be saving money.
DOES THE FEE ULTIMATELY GET PASSED ON?
Charges incurred by the bank in gaining new business like you and your mortgage bond, do not affect the rate you are offered. Interest rates are based on how much of a risk the bank perceives you to be, which in turn is based on factors such as the your credit rating, the size of your deposit, and the term of the bond.
As someone who has worked in this sector a long time, I can attest to this: both banks and borrowers do a lot better out of it when there's an intermediary like one of my evo colleagues making things happen. Especially for first-time buyers, it's a no-brainer to have someone on your side to help you navigate the unknowns, and help you to be able to compare apples with apples."
Written by Mark Coetzee, Head of EVO Homeloans