Every article or advert from mortgage originators and other lenders, always
reaches out to the public trying to get their attention and persuade them to use
the services offered. This is done by promising the 'best interest rate' - even
bragging about '2% below' - to a beleaguered public, looking for mortgage
finance for their dream home.
It is unfortunate that rate concession becomes the biggest factor. Instead,
advertising should be about the 'BEST HOME LOAN DEAL'. Advertisements that
over-promise and under-deliver are misleading - firstly, bond originators are
not the lenders, and secondly, clients need to know that each home loan is
unique and that banks base the interest rate concession on many factors that the
public are unaware of. Often in conversations, people hear that someone they
know got '2% below' and then feel under-valued by their bank, because they feel
they are not enjoying as good a rate, and so go searching for the same '2% below
prime'. Ultimately, bond originators who advertise using 'rate as the answer'
are being unfair and doing a disservice to the banks that they originate to.
**Rate requests are based on many factors, with a few of the most common ones
listed below**:
Scoring that banks use is based on a clean track record with the Credit
Bureau and the client's behavior with other creditors, etc.
Client's profile, income level, assets and liabilities, and who they
bank with.
Area.
Percentage loan to value.
It is a known fact that all clients are 'rate sensitive' mainly because of
the all the advertising hype. The most important thing that should be
investigated before accepting any rate offered is the conditions attached to the
home loan by the institution that has made the offer. Sadly, clients are often
only made aware at a very late stage of the transaction, that the rate offered
is not what they in fact thought it would be.
**The most important factors that should be looked at are the features and
benefits that the institution can offer, such as**:
Access facility.
Geographics - how many branches they have and are they close to where
you would like them to be?
Packages that can be offered to save on bank charges, etc.
This point of view is meant to be provocative and it could offend some of the
advertisers who make these promises in the hopes of getting business. But at the
end of the day, over-promising and under-delivering gives a false sense of
service delivery to the end-user.
It is the same old adage - read the small print and do not be afraid to ask a
lot of questions!