mortgage broker

Whose Banker Should You Use?

With developers starting to launch new projects for second half of the year, we get asked the same question all over again from would-be purchasers of new EC and private properties under construction – “Should I take my API or IPA (in-principle approval) from you or from the banker referred by my agent?”

It’s an ugly fight at times which we rather not get into as it demeans the long-term value we bring to clients.  For this reason, do not be surprised we often put it quite upfront with our clients to decide who they want to work with for their mortgage solutions in the long run – a true mortgage professional who knows his stuff and advices impartially with the long-term interests of his client in mind, or an opportunistic realtor who just wants to maximize his earnings with nothing much to offer except arranging for different bankers to call back.

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Another big differentiating factor is the quality and advice of the bankers we work with, whom we painstaking select over long periods of working together, versus fairly new bankers who stationed themselves at the showflats in order to get more business.  When it comes to ensuring a smooth loan application experience, you want to work with the best person in the business.  Our bankers have to pass our tests in terms of their service mindset, speed, ability to get things through, etc.  We cannot comment on the quality of service from other bankers, but we do have quite an impeccable team of professionals on our side from every single bank which you get access to when you choose to work with MortgageWise in the long run, not just at the purchase.

Is that the right way to sell mortgage solutions?  Probably not, especially in today’s context of a rising interest rate and more complex considerations both in terms of loan packages as well as regulations.  It might lead to far-reaching or longer-term implications where the homeowner ends up paying much higher interests by the thousands instead of a mere cashback he thought he had gained in contrast.

Speaking of cashback, we know agents vying with us, the professional mortgage consultants, would sometimes up the ante by offering to give cashback to clients from the distributor fee they will receive from the bank eventually (and you might need to ask for it again).  But it is also my duty here to highlight that any form of incentive especially in cash received by a property purchaser as part of his purchase transaction must be declared (to the law firm) and with such amount deducted from the loan quantum.  So, unless this cashback by property agents is declared to the bank, it goes against the spirit of MAS (see extract from MAS Notice 632 Clause 6(b) reproduced below), not to mention such cash received is deemd “other income” which must be declared to IRAS for income tax liabilities which I am not too sure how many people will remember to do that. Either the realtor would have to declare the entire distributor fee amount received from the bank as income or the homeowner who receives this cashback would need to declare it in his tax filing next year.  Either way someone would have to pay for it as it is income-taxable in Singapore, and IRAS if it so wishes, could uncover any such malpractices through the bank accounts.

IRAS wordings of free gift or cash back

This is why over at MortgageWise, our stand is very clear – we are absolutely not into any form of cashback arrangements.  Plus, this is not the right way to conduct a business if we pride ourselves as professional mortgage advisors who deliver great value to clients as mortgage partners, and not a one-off deal.  We need to earn our keeps and prove our worth.  And we hope all our clients would support this cause and want to see this mortgage brokerage industry flourish to keep all lenders and their rates in check for the betterment of every homeowner in the country.  We want to benefit from lower rates through free market competition.  But first we mortgage brokers would need to survive as a going concern in our own rights.

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And at MortgageWise, we do bring great value to clients who opt to work with us for the long term, with mortgage solutions being our core business as we do nothing else.  Let me give a few common examples:

  • With our proprietary MortgageWise Interest Simulator, we are now able to show you the difference in interest savings when you choose one bank’s package over another, by assuming a reasonably realistic hawkish or dovish interest rate environment over the next three years. The assumptions can be adjusted to reflect the pace of increase on the benchmark interest rate in Singapore – the 3-month SIBOR.  This greatly eases decision-making process for clients through sensitivity analysis, instead of relying on gut feel.
  • Most clients call us for refinancing late and end up having to serve the full three month’s notice paying over 2% at times while waiting for the loan to port over to the new bank at 1.08% for example. That’s almost a one full percentage point savings of $7,000 in a year or $1,800 over three months of notice period on a typical loan of $700,000 (on a straight-line basis).  If they have engaged us as their personal mortgage planner from the start, we would have called them ahead of time to review their mortgage options using our CRM system. This means potential savings of $1,800 or more as we help to lock down lower rates much earlier, plus useful mortgage tips from time to time (like the next point).  This definitely outweighs the cashback from agents in the long run.
  • Do you know one bank actually pays almost additional 2% deposit interest than prevailing fixed deposit rates, when you also take a home loan with them? Speak to our consultants today to find out more.  Many a times, we go over and beyond the usual pitch used by bankers, agents and even our competitors.  We share a lot of useful information with our clients as we are not just here to sell a product or service; we are selling a long-term partnership built on trust.  And we are selling from our hearts.

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 Singapore home loans for banks and financial institutions.

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