Why having a broker in your corner counts

Pepper Money report explains the benefits for borrowers

Why having a broker in your corner counts


By Jayden Fennell

Pepper Money wants to educate borrowers about non-banks and encourage people to seek out and understand their options before choosing the first loan offered or accepting a refusal.

The specialist non-bank lender has released the results of its Money Mindset Report, which surveyed more 1,000 individuals across Australia to unpack how they researched and understood the financial options available to them.

Pepper Money CEO Mario Rehayem (pictured above) said borrowers should engage an experienced broker who knows what questions to ask lenders and can present them with relevant options and provide greater confidence in the borrowers’ financial choices.

“There is a misconception in the broker market, with 57% believing engaging a mortgage broker is expensive,” Rehayem said.

Many mortgage brokers offered home loan guidance and application assistance to prospective borrowers and did not charge a direct fee.

“Despite the misconception around Australians thinking brokers are expensive, the majority also understand the value of a mortgage broker, with most agreeing that a broker can help them understand their options.”

Money Mindset Report findings:

  • 81% of respondents who previously used a broker said they would do so again in the future
  • 98% of respondents said taking the time to understand their options helped them more confidently make financial decisions
  • 53% admitted to having taken the first loan approval option they were offered
  • 78% admitted to experiencing regret at least once because of a past financial decision
  • 71% said in retrospect, seeking additional options would have enabled them to confidently make a better financial decision
  • 25% cited a fear of being turned down elsewhere
  • 32% said they felt it would take too long to look at other options
  • 34% said they were just relieved and happy to have received an approval in the first place

Rehayem said in these times of changing lending criteria and tightening household budgets, many people felt the goal posts had shifted when wanting access to home loans.

“Just because a bank turns you down, it doesn’t mean you’re out of options. More than ever, borrowers should have an expert like a broker in their corner to help them understand all the different lenders and loan alternatives available without all the stress,” he said.

“It's a broker's role to get to know you and act in your best interests – unpack your needs and goals, analyse your borrowing capacity and understand what’s important to you in a loan.”

Rehayem said when making big financial decisions such as taking out a loan, it was understandable that some people would find the array of options overwhelming. 

“The finance market has so many different lenders and variables that it can feel confusing to navigate, but taking the extra time to find the best option for your circumstances can make a bigger real-life difference to the household budget,” he said.

“It’s important that borrowers understand there are often a range of alternative flexible finance options to explore beyond banks and they should seek out and understand their options before taking ‘no’ for an answer or jumping at the first ‘yes’ they are offered.”

Rehayem said he wanted borrowers to understand there was hope and there was help when it came to finding the right financial products to meet their personal needs and preferences.

Many survey responders said they believed compromises sometimes need to be made to secure a loan.

“Our financial landscape is vast and many people will have multiple options available to them,” he said. "If taking a little extra time to understand your loan options could put more money back in your pocket, help you get the best option for your circumstances, or even be the difference between getting approved for a loan or not, surely that is time well spent.”

Four tips to help borrowers find the right home loan:

Get real help, ask a broker

Rehayem said it could be challenging, confusing and time-consuming finding the right financial option.

“The finance market has so many different products, with just as many lenders and even more experts claiming to know the best option for a home loan, car loan, or personal loan,” he said.

“When it comes to home loans, getting the help from an expert who is at the forefront of all the latest financial products, options and lenders, can really help you identify suitable solutions for your circumstances.”

Options, options, options

Rehayem said there was a lot of value in seeking out loan options from a range of lenders and looking beyond the banks.

“A non-bank lender could provide you with a solution that your bank cannot or will not offer you, factoring in things like credit blips, debt consolidation, help for those who are self-employed with alternative ways to verify their income and options for newly established businesses,” he said.

“It’s important that we encourage consumers to have the confidence to seek out and consider their options when looking for a home loan, rather than feeling they have only got one place to go to.”

Rate vs repayments

Rehayem said when assessing available options, it was important to consider the repayment amount, not just the rate.

“You need to determine whether the repayments are affordable and suitable for your personal financial circumstances and a broker can help you understand your borrowing power and how much your repayments will be,” he said.

The Magic of refinancing

Rehayem said for borrowers who already had a loan, refinancing was an option that could only improve their circumstances.

“Refinancing can help you save money by securing a better interest rate and/or lowering your monthly repayments,” he said.

“It can also help when consolidating debt to get back on track and improve cashflow. There is also the option to free up equity that you have in your current home to fund other purchases or achieve other lifestyle goals like renovations or purchasing new home appliances or furniture.”

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