Mortgage brokers account for approximately 40 to 50% of all home loan submissions in Australia, but there still seems to be many people who are confused about what they do and how much it will costs them to use one. Do you really understand what it is that a Mortgage Broker actually does?
I am constantly amazed when I speak to people about what it is that I do as a mortgage and finance broker how many of them really do not understand what it is that we do. There seems to be this feeling that by using, or even meeting with a broker, will cost them money, and that if they proceed with our recommendations that it could even cost them more money. The truth is that what we offer to our clients is a free service, and this service only exists to provide our clients with a great finance deal, and help them to understand the process and take away the difficulties associated with understanding the myriad of finance options available in the market.
But you get paid commission, so it must be costing your clients money? Yes we get paid commission from the lender that we ultimately recommend, however we always put the best interest of our clients ahead of any financial benefit from commissions. The commission is not added on to the cost of the finance either, I mean it is not like that they can walk into the same bank we recommend and get a cheaper deal than we can get for them, and in so many cases we find that just the opposite is true. Because we are holding the banks accountable and have a really clear and current idea of what most of their competitors are doing, the banks will ensure that we can provide the best deal for our clients, quite often less than their standard rates.
So let me get this straight, the bank pays us a commission from their profits, not added to your loan costs, so it does not cost you anything. You get our experience and comparisons with many other products available on the market (I cannot imagine too many banks doing that). You get an experienced finance professional providing detailed advice in regards to loan structuring that is specifically tailored to your personal circumstances (there is no one size fits all product in lending). And if that is not enough, you will have us to call on for advice in the future as well.
The other reason why brokers are the best person to make your first port of call when looking for a loan is that generally they have all of the details of the differing lending policy of all of the lenders available. There is a significant disconnect between different lenders policy, especially when it comes to first home buyers, but also around other critical issues like self employed income, Casual income, length of employment, and even government benefits. While all of these are suitable forms of income with some lenders, the amount they use, and whether they will use it at all depends on the lender policy. This is why it is far more beneficial to speak to a Mortgage Broker before speaking to your own bank in some cases.
Picture this example, you are keen to purchase a home and trundle off to see your bank and end up lodging an application with them for your new home loan. The home loan specialist, who is about 24 and has at least one years experience in lending informs you that everything looks great, but then four weeks later after much stress and frustration you are informed that your loan has been declined due to your recent change in employment. You now have the original application on your credit file, and are without an approval on your new home contract which is about to crash. Even if you go to a mortgage broker (which is about the time many people consider one) you have to contend with the mark on your credit file, which can adversely affect your credit score with any future banks. While we can often work a miracle for our clients in these instances, your list of lenders willing to provide funding would have diminished due to the credit inquiry on your file.
If you had come directly to a Mortgage Broker in the first instance, you would have been able to tell them your preference to deal with your current bank, and they could have advised you whether your proposal would have fit that lenders criteria or not. If it didn’t, they could avoid the bank declining the loan in the first place, and gone straight to a lender that would accept your personal situation and provide the most cost effective option available. That way you save considerable time and angst along the way, and avoid the need in many cases to have to resubmit to a second lender.
A mortgage Broker can recommend your own bank, or provide you with comparisons so that you can make an informed decision as to whether you want to consider an alternative to your lender due to a more competitive product elsewhere. It is not always about price though either, and the key thing to remember when assessing a suitable lender for your finance, is whether they will provide a suitable product and accept your personal circumstances.
So if you have never considered using a mortgage broker and want to get some good quality advice about what your finance options are, whether it is for a purchase or a refinance, the best place to start is with a mortgage broker, and the best mortgage broker to start with is Loan Wize, we are your professional Lending Specialist providing Lending solutions to many satisfied clients. We know you we doing something right when the majority of our business comes from satisfied client referrals. So call us first, before you speak to you bank, what could you possibly have to lose?