The common question we often get asked is “Do I have to pay you for this service?”.
No, you do not have to. Our service is free as we are paid a distributor fee by the lender. Yet the interest rate that you will be paying by signing up through us is the exact same rate you will pay when you apply to the banks directly. Otherwise we will let you know and that happens occasionally.
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Let me give you a few examples right now (in the month of May/Jun 2017). If you go to DBS website you will see that there is a floating rate package of 1.38% p.a. (FHR9 + 1.13%) which comes with an interest rate cap of 1.68% p.a. in the first two years. Now it says quite clearly in the finer print that this package requires one to sign up for a mortgage insurance plan (ManuLife) with the bank, and is only available to those who apply to the bank directly and not via a broker. However, DBS has gladly made the same package available through external mortgage distributors, just that it comes with a higher interest rate cap of 1.78% in the first two years, instead of 1.68%. We know of some brokers out there who just ask their clients to sign up for this package with the 1.78% cap without informing them that there is actually a lower cap available for direct-to-bank applications. Obviously, they will lose the deal if they do that. However, at MortgageWise, we tell everyone that, but we offer them something even better! Find out more by speaking to our consultants today.
Here’s another example. If you go to UOB website, you will see that the bank offers a 2-year fixed rate package at 1.58%, 1.68% that comes with Tangs gift cards promotion of up to $1,000, provided you apply for this package directly with the bank. Again, we do inform all our clients about this direct offer. However, what most do not know is that they could get an even better deal when they apply for the 2-year fixed rate through us here at MortgageWise. Find out more. In fact, that is not the absolute lowest fixed rate in the market. Speak to us today if you have a loan above $1M and wish to lock down the absolute lowest fixed rate instead as every percentage point counts for a loan of that size.
The misconception in the market is that when you take your mortgage through a broker or third party distributor, you will get an inferior deal as surely the bank now needs to pay a distributor fee to another party and this will be “built-into” the price or interest rate. However, what most people forgot is that even if they apply to the bank directly, which takes a great deal of effort as they will need to speak to at least three to four banks and gather all the information on their own, they still end up dealing with a salesperson at the other end. Or to be more precise a salesperson who is driven by commissions. Do you think mortgage specialist at the bank, or for that matter, relationship manager at the branches only get a basic salary? No. To be successful all great companies employ a low basic but high commissions structure in order to achieve higher sales. In fact, you have heard all about it, apart from interest income, banks are making more money these days from fee income generated from wealth management business. Sales is the forefront of the banking business.
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The truth is this – yes the distribution costs for originating a mortgage loan is built into the price or the interest rate, but the allocation of that between internal sales (mortgage bankers or specialists) in the form of commissions or external distribution network (mortgage brokers or consultants) in the form of distributor fees, gets shifted. Yes, the banker might earn less commissions when the lead comes from a broker, but he is happy to share that in return for the volume of business he gets in return.
This volume is, in fact, all the difference it makes to you as a homeowner. By working with a mortgage consultancy firm that does big-volume business and refers many customers to the banks, from time to time, we do get some preferential pricing or privileges from certain banks that is not openly available to the general public. You will not see these rates featured on our website as well. Because these are what we call “deviated rates” which are “below-the-line”, made available only to our clients as we also drive a sizeable volume of loans to the lenders in return. In addition to such occasional special deals from lenders, by working with us, you also benefit from economies of scale, or “bulk discount” privileges if you like, for example exclusive legal fees, rewards programmes like our Tangs voucher scheme, higher service standards from our select panel of mortgage bankers all eager to do our business etc. Speak to our consultants today to find out more!
In ending, let me go back to my first point – we are the few, if not the only, mortgage consultancy firm that seek to deliver the true “whole of market” solution when it comes to mortgages (try us out to believe). This means that if there are packages out there where lenders are not paying us a distributor fee, or where there are certain differentials between applying direct or applying through us, we would tell you. We will not advertise these packages as we are not paid, but we will tell you. This goes to the heart of our brand promise – to walk alongside you in your mortgage planning process for the long term and always putting your interests first. We are not here to do a one-time business unlike most bankers or property agents. However, we also need your support from time to time when the going gets tough in our industry. We hope this camaraderie will continue to deliver mutual benefits in the long run, as long as there is a need to service a mortgage – one of the major cost item in a life time for most.
At MortgageWise, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements. We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal. We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of mortgage products for banks and financial institutions in Singapore.
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