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Did you know that “finance brokers originated at least $46 billion in new home loans during the March 2017 quarter”? Further, the loans originated by the brokers in the said quarter accounted for 53.6 percent of the total residential home loans taken out in the period. (read report on TheAdviser)

 

 

But why are more and more people relying on mortgage brokers to finance their homes?

The answer is simple – Brokers save you time and money, holding your hand throughout the financing process, and guiding you even after your home loan has been settled. A survey by Mortgage and Finance Association of Australia (MFAA) revealed that 92 percent of the people who use a broker are fairly or very satisfied and are likely to recommend their broker to family and friends, which, indeed, speaks highly of the services offered by over 17,000 mortgage brokers in Australia. 


What is a mortgage broker?

In straightforward terms, a mortgage broker is a middleman between you, the borrower, and the lenders. 

Apart from helping you assess your borrowing capacity, getting your loan documentation in order and negotiating with lenders on your behalf, a good mortgage broker will guide you towards a home loan tailored to your requirement and financial condition. 


What does a mortgage broker charge?

More often than not, the services of a mortgage broker are free for the borrowers. Instead, mortgage brokers are paid on commission basis by the lenders they deal with. The size of the commission varies from lender to lender. Mortgage brokers receive two kinds of commissions from the banks:

  • Upfront Commission – This is the one-time amount that a broker receives from the bank on the successful settlement of a home loan. It can be up to 0.5 percent of the total loan amount.
  • Trail Commission – This is an ongoing commission that is paid to the broker regularly (monthly or yearly) until you keep the home loan with the chosen lender. The amount ranges from 0.1 to 0.3 percent of the outstanding loan amount.

However, in case you decide to refinance your home loan with another lender within the first year of settlement, the original lender will claim back the full commission it paid to the broker as Clawback fee. If you refinance between 12-24 months, the Clawback fee usually reduces to 50 percent of the commission received by the broker. While such cases are not many, a few mortgage brokers pass on the Clawback fee to the borrower, which is something the borrower must be informed of, in advance.

Here’s what a mortgage broker would do for you:

  • Understand your financial condition to assess your borrowing requirement.
  • Find a tailored home loan deal at a competitive rate for you.
  • Help you get pre-approved for a home loan.
  • Ensure that your paperwork is complete and orderly.
  • Inform you about any State Grants, if applicable.
  • Ensure seamless settlement of your home loan, and stay in touch post-settlement for a regular health check-up on your home loan


Choosing the right mortgage broker for your home loan

Apart from asking your friends and family for recommendations, follow these tips to find an expert mortgage broker to help you finance your home.

Licensed broker – Ensure that your broker is registered with the Australian Securities and Investment Commission by searching ASIC Connect’s Professional Registers or call ASIC’s Infoline on 1300 300 630.

Fee Structure – A broker may recommend a home loan over another due to the higher commission offered by some of the lenders. To ensure you are offered the best deal for your situation, it is a good idea to ask the broker of their commission structure.

Do your homework – While a mortgage broker will help you find the best deal for your financial requirement, it is pertinent that you do your research and openly discuss the features you need in your home loan with the broker. You are not bound by the advice of a broker, so do not agree to anything you do not require!

Take the information in writing – Before you sign the dotted line, ask the broker to provide you complete information about the home loan including the amount, interest rate, term of the loan, fees, etc. in writing. Review the information thoroughly before signing and do not leave any blanks to be filled in by the broker after you have signed.


Using a mortgage broker will save you time and money.

Here’s how:

Choice – Mortgage brokers deal will several lenders, having access to a wide range of financial products including bad credit loans, low-doc loans, low deposit loans, professional home loan packages and other products in line with your specific needs. While a bank’s representative would only recommend the products offered by their employer, a mortgage broker has a much wider range of products for you to choose from.

Lower Interest Rates – Apart from ensuring high customer satisfaction levels, mortgage brokers are also known to provide better interest rates to their clients than those advertised by the banks. This is possible because brokers work with a large number of lenders, and often pass on a part of their commissions to the clients, securing a better deal for them. Further, as brokers do a lot of pre-application work for banks, they receive better rates on loans than advertised for regular customers.

Convenience – With a mortgage market flooded by lenders and home loan deals, borrowers can spend days searching for the right home loan, and yet miss out on some essential features or be warped by hidden fees. A mortgage broker, on the other hand, will do all the legwork for you, shopping for the best deals as well as guiding you through the approval process until the settlement of your home loan.

 
The landscape of the home loan industry has changed. The emergence of online mortgage marketplaces such as HashChing has turned the mortgage market on its head – making it much more transparent and borrower friendly. 

HashChing allow you to compare home loans from the comfort of your mobile or laptop screens. Home loan deals from over 60 lenders across Australia are updated weekly on the website. The mortgage marketplace also enables you to find an expert broker in your local area from a database of mortgage brokers reviewed and rated by real customers. Get in touch with an expert now, or fill in the form below and we will put you in touch with one.

 
By Vidhu Bajaj
HashChing Content Writer
 

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HashChing is helping Australians by providing access to the pre-negotiated home loan deals. Obligation free consultation with one of our partner brokers might save you time, hassle and money.