If any of you are reading this article must be aware of the fact that financial institutions work in a lot of ways, this institution is not just for deposits and withdrawals of cash and cheque, not just the custodian of the lockers and precious belongings, not just the institution which compels one to update the record of personal information for smooth operation of the bank account but also, it allows the common man to take loans to fulfill dreams of their lives (by charging a suitable amount of interest on each payment of installment). Things are not restricted to home or car mortgage broker people place collateral and get money for urgent needs. There are so many aspects of a financial institution, but usually common people like us don’t know how the banks actually functions, so let’s discuss few things which will make a common man’s life a bit easier or in other words one can understand how a bank operates.
A bank is an institution which is earning from you, that’s the fees of service the bank is providing you. The cash which is there in the bank account is not physically there, it’s a pool in which every single cash is merged yours, mine, ours, x y and z everybody’s cash is in the pool and that pool is there with the bank; the bank invest money from that pool in order to earn interest. The investments like: real estate, stocks, bonds and TDRs, now the question arises that how the money is always available for the clients? Now that is a margin game a bank always stays ready with the reserves and that allows the bank to arrange the desired amount by the client (from his/her own account). Mortgage broker Hurstville is nothing different, when the client reaches out to the bank for mortgage and/or car financing then the bank gives the lump sum amount of money, keeps the actual ownership papers of the house/car with itself; and receives installment payments in return.
But that’s not like giving back the installment as it is, it’s like giving back with something extra on it (interest amount). Interest amount is the actual earning of the bank, the more years of financing gives extra chance to the bank to earn from the client. Just like any other borrowing bank charges extra amount in order to fulfill the salary and other needs of its own. People usually don’t understand what is happening at the back of the bank, hence this is what is happening. Lockers are provided to the client against a nominal surcharge, which is also the earning of the bank. See that’s how a bank earns and provides services, financial brokerage is one of the stem of financial institutions.