Considering using a mortgage broker to help you find a home loan?
Let’s learn more pros and cons of using a mortgage brokers.
Mortgage brokers write approximately more than half of all home loans in Australia, making it a multi-billion dollar industry. It’s easy to see the attraction: working out what is on offer from each institution can be time-consuming and confusing. Much easier to let a mortgage broker do the legwork for you.
What is a mortgage broker?
A mortgage broker is a type of financial adviser who specialises in helping people find a home loan (a mortgage).
What does a mortgage broker do?
A mortgage broker is essentially a conduit between the lender (usually a bank) and you. Their first job is to assess your financial affairs, put together a picture of your credit-worthiness, and help you determine what type of home loan will be right for you. They should then offer you a variety of home loan options from the panel of home loan lenders they act for. Mortgage brokers generally offer lending products from a number of different financial institutions, not all of the lenders on the market. Because they have access to numerous products, they will almost certainly have access to something that suits your needs and they can spend the time with you to understand what your goals are, to explain the options, and to help you with the paperwork. They can potentially provide you with a very useful service.
Why use a mortgage broker? – Pros & Cons
For some people, using a mortgage broker can be a great move for your financial situation, but carefully consider the pros and cons and check that the broker you choose has the qualifications and experience necessary to find you the best product they can.
Pros of using a mortgage broker
- A mortgage broker can potentially be an invaluable resource for those with a poor understanding of the finance and mortgage industry, or their own financial affairs.
- A broker may be able to find you a mortgage that’s better for your individual situation and affairs. The lender pays them, so it costs you absolutely nothing to use a broker.
- If you don’t have the time to do the extensive research required to properly assess the variety of home loan products available to you, a mortgage broker can do this for you (within the panel of products they sell).
Cons of using a mortgage broker
- Mortgage brokers act on behalf of both buyers and the lenders that pay them and as such may only show you products from a small number of lenders. Aussie Assist has 31 lenders to choose from. Educational qualifications and industry experience can differ widely between brokers, so make sure to enquire about this before you engage the services of any mortgage broker
What to ask a mortgage broker
- How many lenders do they deal with? No point in going to a mortgage broker that recommends products from only two or three lenders. It’s also worth asking whether they have a bias towards any particular lender and if so – why. 2. What will my refinancing costs be?Refinancing costs (for example, a loan application fee, a property valuation fee, lenders’ mortgage insurance) are separate to the payment that the broker receives – and these refinancing costs DO come out of your own pocket! It’s important to ensure that the costs associated with switching are not going to outweigh the benefits. 3. Are they a member of the FBAA is also something that is useful to know. The Association is the peak body for mortgage brokers in Australia and requires members to abide by a Code of Practice. Our Brokers are members of FBAA
Do they understand what you want?
It’s great to ask your mortgage broker lots of questions, but you need to answer some as well. In order for mortgage broker to recommend a good loan for your needs, they need to what you’re looking for. Why are you refinancing? Are you going to stay in this property for a long time? Are you planning renovations? Giving your broker a sense of your future goals will help them to find a home loan that suits your needs.