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A mortgage broker is a financial adviser that specialises in home loans. They guide you through the home-buying process by gauging your needs, assessing your financial situation, suggesting the appropriate loan structure and introducing you to multiple lenders that may have what you’re looking for.

In essence, they provide expert advice on a highly complicated financial investment.

What does a mortgage broker do?

Mortgage brokers maintain relationships with a suite of mortgage lenders and are familiar with all of the specific mortgage products, features and benefits each lender offers.

They are also familiar with how lenders treat different types of borrowers based on borrowers’ goals and realities, including:

• Whether the borrower is a first-time home buyer, property investor or someone refinancing their home
• The borrower’s credit score
• What the borrower can afford to borrow
• How much the borrower has for a down payment
• What additional options/features suit the borrower’s situation
• Where the borrower wants to live and in what type of residence
• When the borrower would like to pay off the debt

When a prospective home-buyer approaches a broker, the broker will already know the lay of the land and will be able to manage the borrowers expectations, guide them to the right type of products and narrow the field to a few home loans that best suits the borrower’s needs.

The broker will explain how each loan works and what it costs (for example, interest rate, features and fees). The broker will apply for a loan on the borrower’s behalf and manage the process to settlement.

Brokers can save you a lot of time, since you only have to explain your financial situation once to the broker rather than to numerous lenders.

How much does a broker cost?

It usually doesn’t cost you anything to use a broker, as brokers are usually paid by the successful lender in the form of a referral fee or commission.

In fact, a broker can even save you money since the broker knows saving money is a chief concern for most customers. Ideally this will come in the form of a loan with lower interest rates and reasonable fees.

Nore: Some brokers get paid a standard fee regardless of what loan the broker recommends whilst other brokers get a higher fee for offering certain loans. How the broker gets paid could influence the loans a broker recommends.

You should ask around or look online to see how different brokers earn their fees and commissions to determine who’s the most impartial.

Where can you find a mortgage broker?

There are primarily two places you can find a mortgage broker:

• Local mortgage brokers. These mortgage brokers know how your personal goals and objectives match up with the local market. They usually target the higher-end market and offer more personalised service and may even offer ongoing assistance (like periodically checking to see if you’re getting the best rate).
• Online mortgage brokers. These are larger, more dispersed brokers who you’ll usually contact online, but who may also have local satellite offices. Due to their larger size, they often have larger networks of lenders to compare.

Either type of broker should offer multiple avenues of communication, such as in-person meetings, video chat, email and phone.

Should you use a mortgage broker?

Because most mortgage brokers don’t charge you anything, it’s never a bad idea to talk to one – if anything to get a bunch of options at once and to learn a thing or two about the home-buying process.

If you don’t get a good vibe from your broker or think you can find a better deal yourself, you can always pass on their offers and take your new-found knowledge elsewhere.

Pros and cons of using a mortgage broker

The following table offers some pros and cons to using a mortgage broker:

How to choose the right mortgage broker

• Before meeting with a broker, make sure they have a license to give you credit advice.
• Ask around You can also ask your friends, family and colleagues if they’ve ever used a broker and what their experience was. Get them to put you in touch with brokers they trust.
• Trust your gut. You have to get the sense that your broker is working in your best interest, rather their own or the lender’s. If the vibe seems off, there are plenty of other brokers out there.

For more detailed information on making sure you find the right broker and how to get the most out of the one you use, check out our guide on using a mortgage broker here.

Bottom line

Brokers can be a valuable resource in the home-buying process, especially if you’re new to the game. It can save you a lot of time, hassle and money – often without costing you anything in return.

Just make sure you’re comfortable with your broker and sure they are working to get the best deal for you. It’s also worth having a glance at the market yourself to ensure you’re broker’s on the right track or to pick up any deals the broker may have missed.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

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A personal loan is a monetary loan you can get from a credit provider such as a bank, credit union or online lender – usually for a specific life purpose like renovating your home, paying for a holiday or consolidating several smaller loans. Lenders approve personal loans by evaluating your creditworthiness.

When you enter into a contract for a personal loan, you typically receive money in a lump sum and agree to repay the lender back the money in regular instalments over a specific length of time.

You also pay interest on the amount you borrow, and in some cases, fees and other charges. These interest rates, fees and charges can vary from lender to lender, loan to loan and borrower to borrower.

How do personal loans work?

If you’re considering a personal loan, you should become familiar with some of the details, including how much you can borrow, how to apply and how much they cost. Here are some of the main concepts to remember:

• The amount you can borrow. Personal loan amounts can be very small or very large. We’ve seen lenders offer loans as little as $500 and as large as $70,000.
• The application and approval process. You can apply for some personal loans online in a matter of minutes and be approved (or denied) just as quickly. With others, you may have to visit a branch and it may take days for the approval process to complete.
• The cost. On top of requiring you to repay the loan amount, lenders make their money by charging you in a number of ways. These may include interest on the loan, as well as fees like an establishment fee, monthly fees, late payment fees and early discharge fees. Your specific combination of charges will be described in your contract.
• The loan term. This is how long you’ll be paying off the loan. We’ve seen loan terms as short as 3 months or as long as 7 years.
• The amount of repayments and when they are due. Your loan amount, interest rate and loan term will be set in advance, so it’s easy for the bank to calculate exactly what your regular payments will be and when they are due.

Types of personal loans

Here are the main types of personal loans you may encounter:

• Unsecured personal loans. Your standard personal loan you can use toward various life projects like a holiday, home renovation or medical bill.
• Car loans and other secured loans. A personal loan where you offer up an asset as collateral in case you can’t make your payments. This collateral is officially known as the security. Take for example a car loan, where the purchased car serves as security that the bank can repossess if you can’t make your payments
• Debt consolidation loan. A special type of personal loan you would use to pay off several smaller loans.
• Line of credit. A personal loan where a specific amount is available for you to borrow, but you don’t have to borrow it all. You only pay interest on the amount borrowed.
• Quick cash loan. A personal loan that doesn’t have a strict acceptance criteria so that people with lower credit scores can get the loans they need. These often come with higher interest rates and fees.

How much do personal loans cost?

The cost of personal loans will differ from person to person and loan to loan. A large part of this comes down to your creditworthiness. For example, someone with a higher credit score and a more positive borrowing history will often pay less for the same loan than someone with lower marks.

Here are some factors that will determine how much you’ll pay:

• Interest rate. This the percentage your debt will increase every year. Most personal loans will charge an interest rate. The Australian Securities & Investments Commission has capped interest rates at 48% but we’ve seen rates as low as 5.75%.
• Fees. Many loans will also charge fees on top of the interest, such as a one-off establishment fee to set up the loan or even monthly fees. Some very small loans might do away with an interest rate altogether in favour of one set loan fee.
• Comparison rate. This is simply a loan’s interest rate when fees are factored into it. Since not all loans charge the same fees, this comparison rate makes it easy for you to compare the loan cost of several loans side-by-side.
• Length of loan. Since your interest rate adds to your balance each year, the longer you have your loan, the more you’ll end up paying in the long run (all else being equal).
• Amount borrowed. Generally speaking, the more you borrow, the more you’ll end up paying for the loan.

How do you apply for a personal loan?

1. Decide how much you want to borrow. Work out how much money you need for your holiday, home renovations, debt consolidation or whatever personal project you need the funds for.
2. Work out how much you can afford for payments. Use a loan calculator to work out how long you’ll need to pay back the loan, based on how much you can afford to pay back per month.
3. Compare personal loan options. Identify a few lenders with loans that meet your criteria from the first two steps.
4. Gather your paperwork. Gather together any paperwork the lender asks for. This may include ID, bank statements and proof of address.
5. Apply. You can apply for most personal loans conveniently online.

Does applying for a personal loan affect your credit score?

When you apply for any loan, your credit score can dip slightly. However, with New Zealand’s Comprehensive Credit Reporting system, regular on-time payments can help your score go right back up.

Some lenders will advertise something along the lines of “free rate quote that won’t affect your credit score.” This means they will quote you a rate based off of basic info like your income and the amount you want to borrow – without doing a credit check.

But this is not the same as applying for the loan. If you want to apply for the loan based on the rate quoted to you, you will usually have to go through a credit check and your score may dip as a result.

Who should get a personal loan?

You should only get a personal loan if you have a specific purpose in mind for the money: to help pay for a special project, purchase or life event, or to help out in a time of emergency.

Taking out a lump sum without any real purpose for it could lead you to squander it and end up with a large debt with not much to show for it. For regular ongoing purchases you plan to pay off regularly, you could consider a credit card instead.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual or business. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

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Valentine’s day is just around the corner. And you know what that means: candle-light dinners, romantic water-side strolls, mouth-watering chocolates, exquisitely arranged bouquets and… your beloved’s outstanding debt? 

At first you’ll be enamoured by that special someone’s talents and strengths but there will come a day when you have to face their flaws. And no, we’re not talking about letting one rip in the middle of a Netflix special, because we all do that.

What we’re talking about here is the possibility that your loved one has poor financial habits – habits that could get you into trouble if you’re not careful.

We have an easy-to-follow guide to help you avoid becoming an unwitting victim to your partner’s illicit financial rendezvouses, but we just wanted to take this opportunity to offer a few reminders – so that this Valentine’s Day, you’re not seduced into a lifetime of financial betrayal.

How to avoid financial betrayal

Let’s just jump right in. Here are some ways you can protect yourself from your partner’s poor financial habits:

Be wary of going guarantor. 

Going guarantor on your partner’s loan means they don’t have the financial capability or credit health to get the loan themselves. Instead, they need to leverage your good financial standing. If they default, it’s on you. No ifs, ands or buts.

Pay attention to your joint credit accounts. 

In most cases, you’ll be just as responsible as your partner for any debts accrued on accounts you hold together. If they run up a huge bill on luxury bags or huge nights out with the boys, the lender and/or debt collections agencies can come after you.  

Check your statement regularly and if you see dodgy transactions, talk to your partner about your concerns. Seek couples counselling if necessary.

You should also check your credit score to see what, if any, your partner’s financial habits are having on your score.

Seek legal advice 

In the event of a divorce or separation, the combined debts that you and your partner accrued during the relationship will get deducted from the overall joint asset pool. 

This includes debt from joint credit accounts AND credit accounts in each of your individual names. So if your partner ran up gargantuan debts, you’ll end up with fewer assets when it’s all said and done – even if you weren’t aware of the debts at all.

However, there may be a remedy. If you can prove to a court that your partner accrued these debts without your knowledge and it’s clear the debts were of sole benefit to your partner, you may be able to get a court order removing these unscrupulous debts from the asset pool.

Bottom line

We don’t want to put a damper on your Valentine’s Day, since it’s meant to be a celebration of the love and respect between you and your partner. But it’s also a time when we’re too quick to don those rose-coloured glasses that hinder our ability to see the whole person we’re dining with. 

So by all means, enjoy your romantic day. Feast on that gourmet Italian cuisine, fine wine and luxury chocolates. Just make sure the one who is footing the bill can actually pay it off – or it could foreshadow a lifetime of financial heartache.

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Comparing credit cards the right way can be rewarding, because there’s a credit card that can cater to almost every lifestyle and financial need.

When you compare, you’ll be looking at everything from interest rates, to reward programs to promotional offers to fees.

Compare credit cards by type of card

Since you probably already know that closing your accounts too often can hurt your credit score, we hope you’ll keep your card for some time. That’s why it’s important to choose the type of card that’s right for you – so you can enjoy its lifestyle benefits for time to come.

Here are the main types of cards:

• Reward credit cards. Cards that let you earn points you can redeem for gift vouchers, merchandise, travel, cash and more. These are great for people who pay off their credit card every month (so as to avoid interest).
• Frequent flyer credit cards. A type of rewards card that works with your airline’s frequent flyer programs to supercharge your points accumulation. These are great for people who fly a lot and who pay off their cards every month.
• Low-rate credit cards. Cards that charge a lower interest rate on purchases compared to most other cards. These are great for people who occasionally carry a balance, such as at Christmas time.
• No annual fee credit cards. Cards that don’t charge a yearly fee just to carry them. These are great for people who don’t use their card a lot or who keep their card mainly for emergencies.

Compare cards by interest rate and fees

Once you know what kind of card you want, you’ll want to find out how much it will cost you. Costs usually come from:

• Interest rate. The percentage your debt or balance will grow per year. Go for a lower interest rate if you think you’ll often carry a balance from one month to the next.
• Fees. These may include annual fees, cash advance fees, international transaction fees, additional cardholder fees and late payment fees. The fewer fees the better, although annual fees are sometimes unavoidable for certain types of cards like rewards cards.

Compare by the promotional offer

Depending on how you want to use the card, you may want to consider any introductory offer that comes with a credit card. Here are some of the most common:

• 0% purchase rate. These cards charge 0% interest on purchases for a limited time, such as 6 months or a year. This might be a good option if you plan to make a lot of purchases at once, such as at Christmas time or before a holiday, and could use a few months to pay it off.
• 0% balance transfer. These cards charge 0% interest, up to a certain amount and for a limited time, on existing debt you transfer over from other cards. These are good for people who want to consolidate debt from multiple cards and have a plan to pay it all off by the end of the promotional period.
• Extra rewards or points. Some rewards cards will offer extra rewards or points just for signing up. For example, a travel card or frequent flyer card could offer a free domestic flight or a rewards card could offer 10,000 free bonus points.
• Waived annual fees. Some cards will temporarily waive the annual fee, such as for the first year.

Compare credit cards by their perks

Many cards will come with additional perks that are also worth keeping your eye out for. These can include:

• Free travel and medical insurance
• 0% foreign transaction fees
• Airport lounge access
• Concierge services
• Purchase protection and extended warranty
• Retail partner discounts
• Hotel status credits
• Event tickets

Bottom line

Conducting your credit card comparison the right way is important for a number of reasons. It can keep you from paying too much for your card and it can ensure that you enjoy valued perks, rewards and lifestyle benefits on an ongoing basis.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

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If you’ve ever wondered what your credit report looks like, wonder no more. This guide will give you insight into your credit report, including what information it contains, how to read it, and why it’s so important.

There are three main credit reporting bureaus in Australia, and you can access their version of your report in a number of ways, including in a written/physical format or through an online dashboard.

Each variation may differ slightly in the way it’s presented, but the bulk of the information will be the similar. For this guide, we’ll be using the convenient (and free!) Credit Simple online credit report dashboard to explain what your credit report contains.

Credit Simple gets its data from the credit reporting bureau illion.

Your credit score

When you first login to Credit Simple, you will see your credit score. This is a reflection of your credit-worthiness boiled down from a heap of lending data into a simple number.

Your credit score and score trend

illion scores range from 0 – 1,000 and the higher the score, the more creditworthy you’re determined to be.

Here’s how the scores break down:

• Score of 0. This is the lowest score you can get and means you’re the riskiest kind of borrower. People with a score of zero either don’t have a credit history at all or have experienced a very negative credit event like bankruptcy.
• 1-499. You have a below-average score and are considered very risky to lend to.
• 500-699. You have an average score and with a few small changes to your borrowing behaviour, you could easily improve your score.
• 700-799. You have a good score and lenders are likely to give you favourable treatment. However, you may want to limit the number of applications you make, as this is what is likely keeping you from having an excellent score.
• 800-1000. You have an excellent credit rating and are considered the least risky to lend to. This puts you in a great negotiating position with lenders.

Your credit history

Your credit score isn’t a magic number that is pulled out of thin air. It is the result of a calculation that incorporates heaps of data around your borrowing habits. The data that your credit score pulls from is called your credit history.

Credit Simple also provides your credit history, broken down into the following categories:

• Personal information. Your name, date of birth, address and previous address.
• Accounts. The accounts you have open including mortgages, credit cards, utility accounts and even equipment hire. It also includes details like the amount you owe and a complete breakdown of your payment history.
• Enquiries. The times you’ve authorised a lender or a utility to do a hard enquiry into your credit history (a hard enquiry is an official inquiry related to an application for a loan). Looking at your own credit history (soft enquiry) won’t decrease your score, but too many hard enquiries can lead to a small deduction.
• Authorised agent enquiries. The times you’ve allowed an authorised agent, such as a mortgage broker or a car dealer, to do a credit enquiry on your behalf.
• Defaults. Any payments that are at least 60 days overdue (or were at least 60 days overdue at the time of payment).
• Serious credit infringements. Situations where a lender believes you fraudulently tried to obtain credit or tried to fraudulently avoid your credit obligations.
• Judgements and Summons. Publicly available court records pertaining to your debts.
• Personal insolvency. Publicly available data from the Australian Financial Security Authority related to bankruptcy.
• Other public record information. Other publicly available information that may be useful to potential creditors when determining your creditworthiness.
• Company directorships. Publicly available information from the Australian Securities and Investment Commission about any previous or current directorships you’ve held in any company.
• File notes. Notes placed on your credit history (at your request) explaining or disputing the circumstances surrounding information on your report.

Here’s what it looks like in the tool:

The categories of reporting in your credit report.

You can expand each section to see much more detail about each. Here we are looking at payment history of a specific account listed in the accounts section:

A detailed repayment history for an example account

What can you do with this information?

As you can see, a credit report is quite straightforward although it can contain quite a bit of information. The good thing about a tool like Credit Simple is that it allows you to have all of this information at your fingertips and dig through it systematically.

Going through your report with a fine-tooth comb can help you in a number of ways. You can:

• Identify areas where you could improve. If you see that late payments are hurting your score more than you thought they were, it’s likely to propel you to make changes.
• Identify errors in your report. If you see something reported that you dispute, you can bring this up with the lender or the credit bureau. Credit Simple lets you lodge a dispute right through the tool.
• Negotiate better terms. If you see that you have a good score, you can have more confidence in negotiating with your lender for better terms like lower interest rates and reduced fees.

The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.

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