What’s the Benefit of Using a Mortgage Broker to buy a Home?
Many people ask me what the advantages are of using a Mortgage Broker to help them get finance for a property purchase, as opposed to just going directly into a lender, or shopping around themselves.
There are many reasons people would use a broker, and each person has individual circumstances, so there is no one answer that can fit all, but let me present some of them to you, and you can then decide which is the best approach for you.
The primary reason that a mortgage broker is an advantage to you is the security and peace of mind that it offers.
A broker in Australia today has to be fully licensed by the Australian Securities and Investment Commission. To do this will need to be properly trained, and up to date in their training. They will need to also be a member of a professional association who will monitor their restrictions and ongoing professional development, as well as hold a strict line on legislative and other requirements. Brokers will also hold professional indemnity insurance, and have access to an external dispute resolution scheme.
The result of all of this means that you should be able to trust your mortgage broker to work for you and provide you with professional service.
Each broker will maintain a list of lenders that he can ‘shop’ your mortgage to. He will be accredited with them (either directly, or through a wholesale aggregator that assists him with the requirements).
Once the broker has understood your individual needs, looked at how much finance you should need based on the property you are intending on buying and how much equity or cash you can put in, he will work out the lenders most likely to provide you finance. Most brokers will have specialised software to help with this process.
Based on the results you will decide which loan to apply for. Considerations you can discuss with your broker to make this choice include interest rates, fees, terms and other loan conditions.
The broker will then assist you to collect all of the paperwork needed to get that application done. This might include items such as tax returns, financial statements, loan statements, pay slips and other information.
The broker will be able to advise you on what you could do to make a loan application more successful, such as staying in a job longer, increasing asset value, increasing income or reducing other debt like credit cards, personal loans or car leases. All of these factors and others may adversely affect your application, and it may be advisable to wait for a period of time to rectify something rather than apply immediately.
The broker, once the best loan for you has been selected, and the likely paperwork gathered, will complete the application directly to the lender on your behalf. You won’t have to go into a branch or speak directly to a loans manager or other bank employee in most cases.
With the application complete, the broker will stay in contact with you and the broker’s contact within the lending institution, keeping you up to date with the loan progress, and advising you of any additional information the bank may require to complete your application.
When your loan is approved, the broker will assist you with signing documentation by gathering contracts and if required, getting them to you (often a lender will send these direct), and providing details for any legal professional you may need in this process.
When contracts are complete, the broker will provide the assistance needed to exchange monies for settlement with a conveyancer (should this be needed).
Once your loan is settled and complete, a broker will contact you from time to time (or as you require) to ensure you are still in the best loan product for your needs, and advise you accordingly.
The broker is working for you, and his job is to provide to you the best lending product for your needs and to assist you in obtaining that loan. His knowledge, insight and experience in the mortgage market will mean that you can obtain loans that you would otherwise have never thought to apply for, and set yourself up long term to get the best possible deal.
A broker doing all of this should be able to save you money in terms of better loan products, time in completing applications and shopping around and setting yourself up for a better financial position.