There are various ways to get a loan for a home, and the decision is all up to you.
There are different ways to go about it; if you're good with tech, you can get one while sitting at home through your mobile device, but if you are a hands-on person, you can walk into any bank or lending service to apply. Alternatively, you can look for a mortgage broker.
Who is a mortgage broker? What does he do? Why would you need a go-between when you can do it yourself? Find out here.
Who is a mortgage broker?
Whether you need a financial advisor, data analyst and/or representative, a mortgage broker has covered you. Your financial advisor is a professional in finding the best home loans for you and even takes over the application to ensure a smooth process.
The mortgage broker always thinks of you, and your interests remain a top priority. This point is what Jeremy Fisher, a managing director at a Sydney-based mortgage broker company, says.
Fisher continues by saying that mortgage brokers take on searching and aggregating data on the best loans. Knowing the best choices and situations, they pick out the best options for their clients.
What's the role of this broker?
The mortgage broker looks over the home loans available to you after checking your financial situation and evaluating how much you can borrow. Brokers are middlemen and act as knowledgeable go-betweens. They will consider different lenders but often exclude lenders who do not offer a commission to them.
Jeremy Fisher notes that a good mortgage broker takes over the stress involved, figuring out your financial situation, strengths and weaknesses, your expenses and income. Then using the data gathered, they'll determine how much you can borrow and how much is advisable to borrow, which lenders to borrow from, all with appropriate analysis of the housing market.
Jeremy says they make sure a client can bear slight fluctuations in the market whilst informing them about how such changes would affect them regarding lifestyle and future loans. The brokers, more often than not, end up bringing the expectations of their clients back down to earth, as sometimes, clients don't make healthy financial decisions.
Should I get a mortgage broker?
The wealth of experience and knowledge of the market mortgage brokers can boast of is very important to a client. Their advice can make a difference for the client; however, as well as upsides, there are also downsides.
Pros
1. Best deal
With their wealth of knowledge and experience, a mortgage broker can find the best available loan option for you, especially when compared to a relative novice that you would be when searching on your own.
2. Manage the bureaucracy
After you employ the services of a mortgage broker, they become in charge of managing all the paperwork involved. This job includes helping to fill out all required forms to secure a loan.
The freedom you will get from this is precious. Handing over to a professional will free up your time and give you peace of mind.
3. They're independent
Brokers usually openly state that they're not leaning towards any lender or being biased. They stress their independence, insisting that they do not look to favour any lender or pick based on lenders with whom they're accredited. Their aim is always to find the best deal for their clients, with the priority always being in the client's interest.
Fisher says it doesn't matter if the broker is independent or part of a big or small group, they have separate interests, and as a matter of fact, all brokers are accredited with over 40 lenders.
Cons
1. Some brokers lean toward commission
You don't pay the mortgage broker; they get their pay from commissions that the lenders pay. Sometimes, this payment method makes some brokers lean towards the lenders who spend the most commissions.
This system is problematic and has even come under some requests for changes. Commissioner Kenneth Hayne recommends that the dynamic be shifted and that customers/clients be required to pay the broker fees to make them more focused on the paying entity.
2. Changing your mortgage broker could reduce your credit rating.
Your credit rating may be damaged if you switch your mortgage broker. So, it can be a sticky situation if you have issues with your broker.
This change is because when you seek to apply for a loan, it is received by the credit bureau from your broker, and applications from multiple brokers raise an alarm of instability and reduce trust, hence negatively affecting your credit rating.
Factors to consider before employing a broker:
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Make sure only to employ accredited mortgage brokers registered under ASIC (Australian Securities and Investments Commissions), the official body, and also that they possess the Australian Credit Licence. It is also much better if they are in reputable associations in the industry.
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Family and friends will give better recommendations than reviews you might find on websites, so speak to them first.
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The more lenders a broker works with, the better. So, enquire from a broker and confirm before choosing.
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Confirm if the broker charges a fee so you can get an early heads up and consider it before choosing.
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Due to the code of practice, the broker that belongs to the MFAA (Mortgage and Finance Association of Australia) must inform you about the commissions they will gain.
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Getting the best deal for you is impossible if your broker doesn't have all the necessary information about your finances. Hence, you must provide them with all the data they need and have a clear idea of your financial future to ensure the best future proof deal. You should collate all the data before employing the services of a broker.