Unbiased Mortgage Advisers (Unbiased), Australia’s first, truly independent and unbiased mortgage service (note 1) believes that Australian home owners could be missing out on more than $1.3 Billion dollars of annual savings on their home loans, according to recent data which confirms that the market disruptor is saving its customers an average of $14,344 (note 2) on their mortgages over just five years.
Unbiased, which, uniquely, doesn’t restrict lenders and rebates all commissions and incentives back to borrowers, analysed the data from customers who had used its breakthrough online service to refinance existing loans during the first six months of its operation.
The data revealed an average savings of almost $3,000 per customer, per year, against the best loan they were able to find without Unbiased’s help, and without surrendering desired features or lender quality. In addition, an average of 136 deals were found, per customer, that offered savings on their current best deal.
“Refinancing to reap savings is a smart move, but the ideal time to get your loan right is when you’re buying your property in the first place,” said Miki Lee, long time consumer advocate and founder of Unbiased Mortgage Advisers.
“But whether refinancing or taking out a mortgage for the first time, borrowers can’t rely on advertised rates as lenders increasingly price loans based on the individual borrower.”
“On one hand, we know that mortgage brokers typically offer only four or less of their commission-paying favourites to their customers (note i). On the other hand, it’s totally impractical for a borrower to deal directly with 100 or more lenders to find the deal that best matches their needs. The need for cost effective, unbiased mortgage advice is more pressing than ever, and that’s where Unbiased comes in,” she said.
Lee believes that after only six months since its launch, Unbiased is already challenging the notion that ordinary mortgage brokers have the systems, tools, technology, lender access and knowledge to act in the best interests of borrowers. “The data tells us that once you strip away the commissions, the limited range and conflicts of interest, and really compare apples with apples from an unrestricted panel of lenders, Australian home owners are not getting an accurate snapshot of their options,” she said.
How does Unbiased Mortgage Advisers Work?
Using breakthrough proprietary technology, Unbiased objectively ranks all home loans from a minimum panel of 2,600 products, along with direct mortgage contest bids from an open market of lenders and brokers via its sister company, flongle. The home owner is able to easily compare all results using software not available to traditional mortgage brokers, while having an independent Unbiased adviser on hand for whatever help they need along the way (including lender negotiation and getting their loan settled). Furthermore, Unbiased Mortgage Advisers retains absolutely no commissions or financial incentives from lenders or brokers, choosing instead to rebate these back to the borrower on a monthly basis.
Lender commissions, which are based on each borrower’s loan amount, comprise of a typical once-off payment of 0.65%, followed by monthly payments of up to 0.3% p.a., all paid to the mortgage broker for the life of the loan. According to Lee, these can add up to $46,000 over the life of a home loan of just $450,000, and quickly dwarf Unbiased’s one-off fee (note 4) of 0.715%, which is paid by the customer only if they proceed with a loan acquired through Unbiased.
According to Lee, inviting maximum brokers and lenders to compete for a home loan means more competition, and better results for the borrower. “Further, removing the influence of commissions removes any risk to good advice for borrowers and provides them with a lucrative advantage that allows them to pay off their home loan faster,” she said.
“There is no question with our borrowers that we are 100 percent committed to looking out for their best interests, because we have no other interests. We don’t keep commissions, we don’t limit range and our technology makes it easy for them to see exactly what they get and how much they’re going to pay for it,” said Lee. “If you need a home loan and you’re not using Unbiased, I can guarantee that you’re wasting time, money or both.”
Notes
1 Unbiased’s proprietary software and method has been individually assessed by the Australian Securities and Investments Commission for compliance with use of Independent, Impartial and Unbiased which are restricted terms under National Consumer Credit Protection Act 2009.
2 “Like for like” average saving over next 5 years; Current Best Deal Cost minus New Refinance Loan Cost over 5 years including all ascertainable interest, fees, charges and rebates assuming minimum monthly repayments for all Refinance Applications processed by Unbiased where the customer identified a Current Best Deal and there is no material change in loan amount or situation.
i The Mortgage Broker Service Gap – a research report by Fujitsu Consulting on the Australian mortgage industry. 11/2006
4 Commission rebates are deposited monthly. Each deposit incurs a processing fee of $1.50.
