According to a report by MFAA (Mortgage and Finance Association of Australia) published in the year 2015, many lenders believe that brokers would account for more than 60% of the mortgage deals in the future, stressing on the importance of the broking channel in the coming years.
Gone are the days when one would walk up to the bank to discuss their financing needs. Currently, almost 50% borrowers in the home loan market prefer to take the mortgage broker route.
What is a mortgage broker?
To break it down for the uninitiated, mortgage brokers are technically the middlemen between the lenders and the borrowers, offering borrowers the key advantages of choice, value and comfort.
A mortgage broker is a smooth channel between you – the borrower, and the lenders. Starting from the time when you approach one with your mortgage requirement, they stay with you throughout the process from assessing your borrowing capacity, offering you deals, helping with the paperwork and State grants (if any) upto the date of settlement.
Mortgage brokers are often paid a commission by lenders whose product they sell. Many brokers charge a fee directly from their clients, in addition to (or instead of) the commission they receive from the lenders.
Here are the benefits of using a mortgage broker:
Choice – Mortgage brokers specialize in home loans and have access to wide range of products offered by various lenders. They have the experience and knowledge to match these to your specific needs, offering you the choice between deals best suited to your financial conditions and aspirations.
Value – As per a survey conducted by MFAA, most people feel that a broker can get them a better interest rate or package. This is quite true as mortgage brokers usually shop around with a number of banks to get the lowest rates for their clients. It is a good idea to ask your mortgage broker to get you multiple quotes from different lenders, before you settle down for one.
Convenience – Convenience is an important benefit of using a mortgage broker. With so many products in the market, one can spend hours searching for the right loan and still be confused. On the other hand, a quality mortgage broker will shop for the best deals for you, help you through the approval process and stay with you till the settlement date! A perfect package for your biggest investment, isn’t it?
Choosing the right broker
With most of us busy in our careers and not very familiar with the market, choosing a broker is not enough. Choose the right broker by following some simple advice:
- Is the broker licensed – Find out by searching ASIC Connect’s Professional Registers or call ASIC’s Infoline on 1300 300 630.
- Go by word of mouth – Ask your friends and relatives for recommendations. There is no better way to judge a broker than the opinion of his previous clients.
- Do your homework – Make a list of all the features you require in the loan and discuss them with your broker. Don’t settle for anything you don’t want.
- Check the fee structure – A broker may not offer you products from a lender who does not pay him any commission. Ensure you are not affected by the bias of the broker.
- Take your information in writing – The loan features, interest rate, term of the loan and any kind of fee that needs to be paid.
- Read before you sign – Do not sign anything before reading or leave gaps to be filled by the broker after you have signed.
Remember that a mortgage broker is under no liability to get you the best deal. It is always prudent to be cautious and do your own homework than trusting someone blindly.
At HashChing, we understand that financing a house can be complicated. We make your purchase easier by letting you compare several pre-negotiated home loan deals online. You can also use our to find out how much you can borrow.
By Vidhu Bajaj