What is a Mortgage Broker?
A mortgage broker acts as an agent between a customer and a bank when choosing and applying for a home loan.
They assess your financial needs, compare home loan products from a number of different lenders on your behalf and manage the mortgage application process all the way to settlement and beyond.
What does a mortgage broker do?
They assess your situation and compare loans
Unlike a bank, where it can sometimes feel like you’re just a number, brokers delve deeper into a client’s situation and ask the right question so they can find you the right solution.
The right lender may not necessarily be the one that will offer you a competitive interest rate.
It may simply be one that will approve your home loan, particularly if you’ve been knocked back for a loan in the past because you weren’t able to quite meet standard bank lending requirements.
This is where mortgage brokers really shine because they’re able to take your information and compare home loans from a range of different lenders and provide you with a product recommendation that best suits your needs.
A bank will try to do the same thing but they can only offer their own interest rates and products.
It’s fair to say that you’re potentially missing out on a great deal if you don’t sit down with a mortgage broker.
They make the home loan process easy
Even if you already have a mortgage, applying for a home loan can be a daunting, time-consuming and even frustrating experience.
Banks aren’t always the best communicators and documents can seemingly vanish into thin air!
A mortgage broker can take care of the entire application process for you, organising your documents, speaking with the bank, pushing the process along, and acting as your only point of contact all the way up to settlement and beyond.
The great news is that organising an appointment and simply having a conversation with a broker is completely free.
Why should you use a mortgage broker?
Because of their credit policy knowledge, mortgage brokers don’t just make the home loan process easy and stress-free.
They can also find those ‘secret’ policy exceptions to get approvals for applications that would normally be declined. This includes people with bad credit, unusual employment or non-residents.
On top of that, the best brokers actually have strong relationships with the key decision makers at the banks meaning they’re in a position to negotiate great pricing.
This can take the form of a sharper variable or fixed interest rate or waiving such fees as accounting-keeping costs and, in some cases, Lenders Mortgage Insurance (LMI).
So first home buyers, investors and high net worth individuals (particularly when it comes tomortgage exposure risks) can also benefit from the expertise of a mortgage broker.
How much do mortgage brokers charge?
Most mortgage brokers are self-employed and work solely on the commissions they receive from banks when their customers reach settlement on their home loan.
Yes, they are paid by banks, but they don’t work for the banks.
Brokers only get paid when the home loan settles, so it’s in their best interest to get you the right loan for your situation!
What’s more, in most cases, their services are absolutely free to you as a borrower.
Some tips to choose your mortgage broker
- Speak to friends and family that have used a broker: Did they have a good experience? You may even want to ask the broker for the contact details of a few of their own clients.
- Do some of your own research: Since buying a property is one of the biggest investments that you’ll ever make, research loan products yourself and always ask tough questions of your broker including what their commission rate is.
- Consider getting a written agreement from the broker: It should detail how the loan works, what features are included, the loan term, the interest rate, and any upfront, ongoing or penalty fees that may apply.
- Take your time: You should never feel like you’re being pressured to sign on to a mortgage. You can always ask for more time to think about your decision. For instance, an online mortgage broker may be more convenient but at what cost?
Do you want to speak to a mortgage broker?
As your financial and personal situation changes over time, whether it’s due to having children, needing to renovate or nearing retirement, you’ll need a mortgage that evolves with you.
With a good broker, you should never feel like you’re in the dark. From application, pre-approval, and settlement, they should be there with you every step of the way and beyond.
If you would like to speak to an experienced mortgage broker for a free, no obligation, simply call us on 0423 459 480.
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