Service Offers Independent Loan Advice
The Age
Wednesday November 19, 1997
INTEREST rates, honeymoon, fixed or variable, administration, valuation and ongoing service fees add up to a headache for borrowers trying to pick the best mortgage deal.
It takes more time and energy than most people have to sort through the pros and cons of one mortgage rather than another. Prospective borrowers become confused and exhausted trying to sift through the masses of information presented to them when they approach banks and other lenders to obtain a loan.
That was the experience of Tim Bolton and his wife, Michelle, when they were seeking to refinance their own home loan about two-and-a-half years ago. They couldn't find an independent organisation to help them make their choice. They realised there was a market for independent advice.
"It was all too exhausting," Mr Bolton said. "We'd looked around for an independent body to advise us, one that was not selling loans itself, but we couldn't find one."
That was when they decided to set up just such a service, now known as MSA Mortgage Solutions Australia, operating from an office in Middleborough Road, Blackburn.
For a flat fee of $450, they select what they believe to be the best three mortgage options to suit the customer's individual needs. The selection is made from a database of 75 lenders after a detailed interview with the customer to determine their real needs.
The customer chooses the one he or she wants and usually pursues the loan application with the lender. However, MSA can do this also.
Because MSA is independent, lenders are starting to take note of the reasons its clients reject a particular mortgage-loan deal in favor of another. They are incorporating the independent body's increasing volume of market data into their own market information.
"The usual reasons for a client's choice are the rate and facilities, such as line of credit, offset and redraw," Mr Bolton said. "There's a comfort factor depending on how the client normally manages his or her finances.
"Of course, everyone's looking at the bottom line. But the cheapest rate isn't necessarily the cheapest mortgage deal. You can have a rate of 6.19 per cent on a $120,000 loan with fees of $8 a month and it might work out to be the same as a loan with a rate of 6.35 per cent," he said.
"Lenders ask us to give them the feedback from our customers," he said. "It gives them an indication of what people are looking for."
Although MSA advertises its services to residential borrowers, it has been receiving an increasing number of inquiries from people wanting small business loans, personal loans and margin lending.
"There's a huge demand for independent advice in these areas and we have expanded our business to meet it," Mr Bolton said.
He said most of MSA's customers come to them after having tried to find their way through the mortgage maze themselves. "When they pay our fee, they are paying for peace of mind," he said.
© 1997 The Age