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The Tauranga mortgage broking industry is fascinating. Up until 2008 when the government changed the regulations around mortgage brokers Bay of Plenty and financial advisors, anybody was able to become a mortgage broker, including basically retired bank clerks and my rent money leaders and managers. While there where obviously a lot of good honest and capable players in the industry, there were also a large number of Cowboys, and these Cowboys were horribly exposed during the financial crash at the end of 2008. Many Borrowers and investments were very badly impacted by incorrect and dangerous advice from their mortgage broker during this period.
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The new government regulations came as a rude shock for many in the industry, as in order to practice as a mortgage broker they had to pass pretty difficult examinations, they had to register with the new Disputes Resolution Scheme plus they also had to register on the Financial Services Providers register. Many unqualified and largely inept player’s in the industry simply dropped out once they realised how challenging it would be to pass the National Certificate in Financial Services, and once they realised that they could be left horribly exposed binding dispute resolution scheme if they and it out blatantly incorrect advice. A number of these players also realised that they weren’t happy being registered on the financial services providers register, and thereby being visible to all potential customers, including those that they had caused trouble to in the past.
The new government regulations have largely been effective and cleaning up the industry, which is very important as the mortgage broking industry is responsible for at least 40% of all new residential and commercial mortgages. They play a vital role in assisting clients who either don’t trust the banks or do not know how to properly compare products from the banks, and they also play a vital role in managing the process of purchasing a new residential or commercial property.
The first step for a mortgage broker with a new client is to determine the clients eligibility for mortgage finance, and in many cases this involves helping the clients to structure their personal affairs or their life in order to improve their eligibility, such as recommending a partner in a relationship find a temporary job it’s their husband or wife is self employed.
There is a wide range of Bank mortgage Options and products, and these can be quite confusing for clients. Mortgage brokers provide a vital role in explaining these to the client, and it is vital that the mortgage broker is fully up to date with the information and is able to properly interpreted and explain it to the client in terms that is relevant to the client in terms of how the mortgages and loans are structured.
Many clients will also need help in working out how much the line will cost them and a weekly and monthly basis, and how this will impact them over the life of the loan. Mortgage brokers Tauranga need to be able to calculate the mortgage repayments and the various options and benefits, and then probably advise the client. Many clients will also need advice and assistance with the home buying process, and the broker will also liaise closely with the bank. New clients also need help and liaising with lawyers, valuers and real estate agents.
A competent mortgage broker will complete the bank loan application forms in a professional manner that ensures success, and this will most probably involved supplying building reports and valuations to the bank, and making certain that the property is properly insured.
Most clients come to a mortgage broker because they are finding it too difficult to get a loan from a bank. They may be wanting to change your home or to purchase an investment property. In a lot of cases the client is a first home buyer, and they really need somebody to trust who can give them good advice on how much they are able to borrow and how much is safe to borrow. Many home owners are just wanting to consolidate their dept or perhaps raise money to purchase a vehicle or a boat etc, and the mortgage broker is vital and helping them think through the implications over the longer term.
Commercial and residential property investors generally always use mortgage brokers, and most of them will have their favourite trusted broker who understands the way they do business and as always searching for a better deal for their client. Clients purchasing a new commercial property for rental require significantly different financial products then clients carrying out property developments, where they want to purchase a property then develop it and then sell it on. This generally requires very specialist understanding of the financial industry.
Clients requiring some capital investment in order to start up a new business or expand an existing business well mostly use and mortgage broker for the financing because this can often be hearing specialist work and they want the best deal from the banking sector.
Mortgage brokers are also generally happy just to provide advice to clients, if they can see it leading to business later on down the track. The advice could be about mortgage interest rates and deals or it could be about insurance or retirement planning, and the broker could provide this advice for a fee in which case they are providing it under contract.
The mortgage broking industry very definitely has its highs and lows, and tends to do very well when the property market is bubbling along heavily, but tends to suffer when the property market is in decline. Quality advice and assistance is still important for clients, and it is important the clients understand during a decline that the mortgage broking industry is a buyers market, and that they should choose their broker carefully.
A good mortgage broker well have a very detailed understanding of all of the major lending products on the market, and they will also have some special deals that they can tap into for their client. For example, a client with a 20% deposit will be able to get a mortgage for $350,000 over 25 years, but the difference between the best and worst interest rates is 0.7 which is a difference of $142 per month in monthly repayments. A client who can’t find the 20% deposit can expect to have to pay a higher interest rate unless they are able to tap into a Welcome Home loan. The New Zealand Reserve Bank is already tightening the money supply and forcing the banks to tighten their lending criteria, so most banks are not now lending to clients who do not have the 20% deposit.
A feature of a mortgage broker industry in Tauranga has that almost all brokers are capable of operating remotely from their clients, although there are obviously some clients that would prefer to have at least one face to face meeting. What was broken is about providing good information and advice, and about finding and executing the best solution for a client. This type of service does lend itself to operate in remotely, provided that the client is happy with this arrangement.
What this means is that mortgage brokers throughout New Zealand can’t take on clients throughout New Zealand, and a hence operating and competing in a much larger market. This means that clients have a much larger choice of mortgage broker, and mortgage brokers have a much larger choice of the type of client but they want to work with. One critical requirement of course is the need for a good reliable broadband connection, and fortunately New Zealand broadband service is world class aside from a few small rural pockets.
Tauranga clients are generally Internet savvy, and provided they know where to look online they can become much better informed then even just a few years ago. The mortgage broker has to bear this in mind, and should make certain that he or she is on top of the latest developments in the industry, and that they have the ability to talk through these with a client and advise the client accordingly. A Nationwide mortgage broking market as a key advantage and that it allows all mortgage brokers Bay of Plenty to access a much larger market, but it also allows those mortgage brokers with specialist skills to specialise in certain areas. For example some brokers may have particular skill in the commercial development area, and they probably will be able to generate repeat business from their development clients. These brokers will need a lot deeper understanding all the mortgage and loan interest rate, including specific Bank requirements and the availability and trustworthiness of second and third tier lenders.
Commercial developers are generally a lot more financially astute than the average citizen, and their mortgage broker will need to be equally astute. Residential clients are generally much less informed and need a lot more hand holding during the process obtaining and executing a new mortgage. This type of work will suit one category of mortgage broker Tauranga, and they will generally love this work.
One important aspect of mortgage broking is that the broker will occasionally or even often have to hand out bad news and advice that is difficult for the client to accept, and it is important that the broker is able to do this tactfully and in a manner that finds alternative Solutions for the client that are acceptable.