Are you a ‘one-eyed’ borrower?

Mortgage lenders love 'one eyed’ borrowers!

What do I mean by this term? One-eyed borrowers are those who focus on one aspect of a mortgage to the exclusion of the rest of the deal.  For most borrowers this single-focus is on the arrangement fee or the rate of interest.

As far as the lender is concerned fee focused borrowers don’t pay much attention to the interest rate they are being charged.  Lenders love this one eyed borrower because they know they can hook them with a product which drops the fee down low, or even make a zero fee product.  

The thing lenders love best is that it doesn’t even cost them anything to do this, they just jack up the interest rate to make exactly the same as they make on their low rate/high fee products - give with one hand, take with the other.

However, there are also one eyed rate borrowers who are so focused on getting a really low interest rate they don’t pay much attention to the arrangement fee they are being charged.  Lenders love this 'one eyed' borrower because they know they can hook them with a product that knocks the arse out of the interest rate, so it looks amazingly low.    

The thing lenders love best is it doesn’t even cost them anything to do this, they just inflate the arrangement fee to make exactly the same as they make on their low fee/high rate products - give with one hand, take with the other.

So whichever way you cut it - the lender gets what they want, regardless of the focus of the borrower.  It’s all smoke and mirrors!

Who do lenders hate as much as they love one eyed borrowers?  Total cost borrowers.  These are the borrowers that don’t let themselves get sucked in by any given aspect of a product, but want to evaluate the offer based on the full cost, factoring in rate, fee etc., of the product over the term i.e. 2 years/5 years or whatever.

Savvy total cost borrowers only pick the product which saves them the most money over the period of the deal.

And, as a footnote, this is where smart investors understand why bridging is a highly profitable strategy - despite higher interest rates.  It opens the door to higher profits, with a faster turnaround so you end up with more in your bank and the flexibility to do more deals.  A little extra cost results in a significantly bigger profit.

So are you a one-eyed borrower or a savvy investor?

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