Jack Meagher, Director at Medipay Doctors explains how a finance broker can help you negotiate a better deal.

Most banks consider medical professionals to have a low risk profile. So, when it comes to obtaining finance, you can often receive preferential treatment and access to a range of benefits that other borrowers cannot. But unlocking these deals and taking full advantage of competition in the lending market means working with an independent adviser and not directly with a financial institution. 

Doctors often have extensive and complex needs when it comes to finance. During your working lifetime you may need to fund a range of assets such as motor vehicles, office and medical equipment, fixtures and fittings, goodwill and residential or commercial property. This will often lead to borrowing from several different lenders or from a lender that doesn’t have a comprehensive understanding of your overall situation. A piecemeal approach, such as this, can end up costing time and money, resulting in inferior outcomes and missed opportunities.

A finance broker can assist medical professionals to overcome these barriers and get ahead, by taking a more holistic approach to their personal and business finance. 

So, what does a finance broker do? 

Brokers differ from bankers, who are direct lenders and work for one financial institution or credit provider. 

Finance brokers act as an intermediary between an individual who wants to borrow money, and the banks and other lenders. As an independent adviser, they provide access to a broad range of lenders to ensure you have the opportunity to select the solution that best meets your needs. In acting on your behalf they are able to manage the process from start to finish. 

A finance broker who specialises in healthcare can tailor solutions to meet specific requirements as your career and personal circumstances develop and change. They can advise on debt strategies and cashflow management, establish loan facilities for acquiring properties or financing a practice and conduct reviews of existing loan facilities to ensure you are optimising your position. 

The benefits of using a finance broker 

Choice – rather than being locked into one bank or financial institution a broker allows you to access a range of lenders. 

Time and effort – finding time to research and compare rates, products and lenders is a huge time burden. Using a broker can remove this hassle as you only need to tell your story once. 

Independence and advice – a broker has a duty to act for you and not the bank. Importantly, they should make objective and impartial recommendations resulting in the right solution for your needs. 

Education – a broker is able to break down the complex terminology and finance jargon into everyday language, making it easy to understand and providing you with the information needed to make a more informed decision. 

Cost savings – this involves negotiating fee concessions, interest rate discounts and waivers of lenders’ mortgage insurance (LMI) which can result in potentially thousands of dollars in savings. 
Allowing an experienced professional to act on your behalf can unlock these benefits and have a material impact on what you ultimately pay on your loan. 

Why medical professionals are in a unique borrowing position 

Doctors have one of the lowest default rates of any profession. When combined with the attributes of perceived stability and high income potential, this makes you a better credit risk and a more desirable customer to a lender. 

In the past, medical professionals were restricted to borrowing from select lenders to access products and features not available in the broader market. This has now changed as each of the big banks have established their own health divisions or industry specialisation policies. As a result, this has created a more competitive finance market for medical professionals. 

If you have only dealt with one or two banks for your finance in the past you are limiting your scope. Be proactive in your approach and make sure you are leveraging your professional status to get the best outcome. 

What does it cost to use a finance broker? 

As a borrower it costs nothing to use a broker, as they are compensated in the form of a fee or commission by the lender for arranging the loan. 

Generally speaking, there is an upfront commission and a trail or ongoing commission. These payments compensate the broker for introducing the business and for the ongoing servicing of the client. 

The banks and lenders use brokers to distribute their products without having to incur the expense of branches and full-time staff. It’s a win for both the borrower who benefits from the service of the broker at no cost and also for the lender who, through a variable cost, is able to grow their business. 

What to look for when choosing a finance broker 

There are lots of finance brokers in the market who have various levels of education, training and experience. 

When choosing your adviser, there are five things you should generally look for: 

1. Accreditation

Finance brokers must be registered with the Australian Securities and Investment Commission (ASIC). They must also hold an Australian Credit Licence (ACL) or be a credit representative of an organisation that holds an ACL. Also look for a broker who is a member of a credible professional industry association such as the Mortgage & Finance Association of Australia (MFAA) as these typically require higher standards in education, ethics and experience. 

2. Experience 

An experienced broker will have an intricate understanding of each lender’s loan products, policies and application process and will know exactly how to position your funding proposal in order to get the best outcome. 

3. Specialisation 

Medical professionals have unique business needs and finance requirements. Ensure the broker you deal with has a track record in dealing with your profession. A specialist broker will also have a network of relevant industry contacts and relationships that they can introduce to meet your other financial or business needs (fitout, equipment etc). 

4. Panel of lenders 

You can tell a lot about a broker by their lending panel. Check if they have a range of reputable lenders and how many of those lenders they use, and why. Bigger lending panels don’t necessarily mean better service. All in all, it comes down to having the right lenders that meet your needs and requirements. 

5. Fees and charges 

Anyone engaging in credit activities must give you a credit guide with information such as their licence number, commission structure and details of your right to complain. This document ensures transparency in your dealings and is important to understand from the outset. 

It comes down to one thing…

Using a broker is a great way to stay one step ahead with your finance. If you depend only on one bank or financial institution you’re likely to be missing out on big savings and better deals. 

DISCLAIMER: MediPay Doctors Pty Ltd ABN 85 609 043 629 | Authorised Credit representative Number 484635 operating under credit licence number ACL 468113 Jack Meagher Authorised Representative No 484635. The information provided in this article is of a general nature and does not take into account your objectives, financial situation or need.