Key Mortgages provides financial advice about getting a mortgage, refixing and refinancing a mortgage and achieving your financial goals related to mortgages and usually at no cost to our clients. Our point of difference is that we help people buy houses, not just get loans. This means that we also build a relationship with our clients and support them through the life of their mortgage.
We offer all of this fantastic support typically at no direct cost to our clients. This is because we receive a commission from the bank when a loan is taken out, and can receive additional payments for advice and support for the life of the loan. In essence, the bank pays us to look after you.
A discerning person would ask then, “how do I know that the broker is acting in my best interest, rather than serving the interests of the bank?” This is a very prudent question which we will answer in this article.
"Key Mortgages is completely independent from any banks, real estate agents, conveyancing firms and insurance providers"
While different brokers may be set up in several ways, Key Mortgages is completely independent from any banks, real estate agents, conveyancing firms and insurance providers. When we take on new clients, we ask them to sign a legal document called an Authority and Disclosure form. Right at the top of this document we declare that the adviser (Key Mortgages) is not an employee, agent, partner, nor joint venture partner of any lender and we do not act on behalf of any lender. We stand legally behind this statement, so you can be assured that it is true.
All the main bank lenders we work with pay us commission, so we can get paid regardless of which bank we send our clients to. Bank choice is based solely on finding the lender that best helps achieve the goals of the particular client. We work with clients’ individual needs, therefore for some clients the best deal can be in terms of the highest amount of lending, while for others it’s about the lowest interest rates, and for others the priority could be around timeframes.
We disclose to clients our typical commission we will earn from the bank. This is a legal requirement in New Zealand, which makes us different from other jurisdictions. Bad rep on the internet about some brokers in different countries does not directly transfer to the New Zealand financial services market.
Our upfront commission from banks is typically between 0.55% to 0.85% of the total loan value. During the life of the loan, where upfront commission is lower, we may also receive a “trail” commission which can be between 0.15% and 0.2% of the loan annually. However, if the client repays the loan within typically 27 months, this usually means we need to repay some or all of the upfront commission back to the bank (this is called a “clawback”’). The broker acts in good faith with the client, and may absorb the risk of the claw back typically where this was unplanned. This is a risk that the broker might, having successfully closed the deal, find out down the track that they don’t get paid for all the hard work.
It is understandable that life circumstances change, and people may decide to refinance their mortgage. That’s why we don’t normally pass on clawback costs to the client – but we ask that in exchange they allow us to organise their new loan. This highlights very well, that while a client is making a leap of faith to trust us, we are also relying on the same good faith.
In some circumstances clients may be charged for services such as when commission is not provided from a main bank, or where there’s a plan for the loan to be repaid in the short term. This is disclosed and discussed before providing services.
"The bank would still have to pay the costs of someone prepare the loan application, be it a mortgage adviser, a mobile mortgage manager or a bank employee"
Another valid question we have heard over the years is whether the broker’s commission comes out of the amount the bank would have lent to the client. People are asking: “Am I getting less lending or a worse deal because the bank is taking some of that money away to pay the broker?” This is absolutely not true. The bank would still have to pay the costs of someone prepare the loan application, be it a mortgage adviser, a mobile mortgage manager or a bank employee.
"If you are self-employed, changing jobs, buying with friends and family, or have low equity – you will need personalised advice"
Banks have changed their operating models in the last decade, cutting down staff and closing down branches. Much of the work is, essentially, outsourced to mortgage brokers. While in the past people had a relationship with their local bank branch, nowadays they could be waiting weeks to get an appointment with an unknown bank staff to apply for the biggest purchase in their lives. Or they might not even get to talk to any person at all and have to apply for their mortgage online. However, the disadvantage is that the bank’s online algorithm is not going to come up with a custom solution for you where aspects are anything outside the usual. If you are self-employed, changing jobs, buying with friends and family, or have low equity – you will need personalised advice from someone who has time to talk to you on a human level. That’s where Key Mortgages comes in.
If you are still not convinced – please have a look at testimonials from our clients. And if you happen to live in Whangarei, ask around amongst your family and friends. Even though Key Mortgages is a new brand, Jeremy Andrews has worked as a financial adviser for over 5 years now and has helped hundreds of clients obtain mortgages and buy houses, cars, boats, perform renovations, and more. Chances are you probably know someone who got their mortgage through Jeremy and his team.