Today the major lending institutions acknowledge that new loans, in particular residential and commercial property introduced loans, introduced through the finance broking network, approaches 50% of the total overall new loans written in Australia in any one financial year.
As a result major lenders are in regular contact with the major finance broker organisations. Here lenders seek advices from the finance broking industry on how they can remain competitive by improving existing loan products, developing new products and regular reviews of overall service.
The finance broking industry has played an ever increasing role ever since the finance broker first gained recognition in the early 1970’s .Initially the role of the finance broker was to match available private individuals funds with a request from a borrower for a mortgage loan.
In the late 1980’s the role of the finance broker developed .At this time major finance broking firms approached a number of the leading lending institutions (specialising in residential and commercial property) to introduce business to lenders and be remunerated for these introductions.
Previously the broker invoiced the client direct for payment for services rendered. The only exception was equipment finance applications, whereas is today, the broker is rewarded by lender.
THIS WAS THE BEGINNING OF THE FINANCE BROKING INDUSTRY AS IT IS TODAY.
Gradually all the major lenders came on board, accepting residential and commercial property finance applications and being remunerated by that lender. Today the broker also receives a trailing commission for the life of the loan arranged.
This received trailing commission in effect becomes a highly valued asset enabling the broker to employ staff, develop better technologies and have an asset to sell, “Goodwill”, on retiring from the industry. In the meantime the broker is personally providing a “fee free service” unless otherwise advised. This broker “fee free service” is not to be confused with any fees the lender may charge.
CHOOSING A FINANCE BROKING FIRM
In choosing a finance broking firm to assist with a loan application one MUST consider the following:
– How many years have they been in the industry, thereby determining their overall experience.
– Have they had any exposure to property and other business investment? All personal experiences gained in investment areas related to clients requirements can only assist in general discussion.
– Membership Accreditations in Professional Bodies representing the finance broking industry.
On your finance broker not retaining membership with one of two organisations representing the finance broking profession in the finance industry, is highly likely, that person or entity cannot assist.
Suggest proceed no further with finance enquiry on approached broker not retaining either:
– Membership of MFAA (MORTGAGE FINANCE INDUSTRY ASSOCIATION OF AUSTRALIA)
– Membership of FBAA (FINANCE BROKERS ASSOCIATION OF AUSTRALIA)
Lending institutions primarily accept applications only from finance brokers accredited with one of these two organisations. Prime reason is membership guarantees necessary industry education standards have been completed(evidenced by certificates issued) ,as requested by major lending institutions.
In summary be confident that a well experienced finance broker retaining professional membership of MFAA or FBAA can assist with your enquiry. Major lending institutions have great respect for the finance broking industry and this association will only continue into the future.