a year ago · 6 min read
For those of us who feel confronted by the time-consuming and stressful process of getting a home loan, using the services of a mortgage broker will make the process just that bit easier. Mortgage brokers are a big fan of solving complex financial situations, offering advice and guidance throughout the process to make sure you get the most suitable loan option.
One of the biggest reasons to use a broker is they operate under a Best Interests Duty (BID) when providing credit assistance to consumers. Coming out of the Royal Commission, financial advisers, by laws, have BID and so do brokers. It means brokers are obligated to provide a detailed and customised rationale for their product recommendation for each client.
Without further ado, here are the next biggest reasons you should go to a mortgage broker when you resolutely decide to get a mortgage. Strap me in!
The toughest part of getting a mortgage - especially if you have a complex case, (you have multiple properties, you might be self-employed, you might have dependants) - is the sheer amount of labour it takes to get to completion. Having to provide endless rounds of paperwork and negotiating for a better deal, it feels as if your brains start crawling out of your eye sockets.
This long and tumultuous process is taken care of by your mortgage broker. In the last 5 years, broker workload has increased by 40 per cent. Mortgage brokers are expected to spend over 20 person-hours to process a deal with the ever-increasing compliance burdens.
But the best part of the process is the end result when customers get a key to their new house. That’s probably the favourite part for any broker. It means all the hours of work that they put in have paid off.
To quote Sir Issac Newton who wrote in a 1675 letter to fellow scientist Robert Hooke: “If I have seen further, it is by standing upon the shoulders of giants”. The phrase can be understood to mean that if you discovered more about something than others, then it was because you have the light of discoveries made by those who are a little further down the path.
There are giants in every field. In the mortgage industry, you are probably better served to go to an experienced and competent mortgage broker who specialises in finding the right deal for your specific goals and circumstances. They have the market and industry know-hows. They understand which lenders match your unique situation and which lenders don’t.
The way brokers operate their business is they will often have a chat with you, understand where you are at and explain the financial aspects of buying a home to you to help you gain more confidence. They will then thoroughly investigate, look at a whole range of lenders who will cater for all your variables. They basically do all the work behind the scenes to shortlist a few options that will work for you and tell you why. As a consumer, that mortgage broker has just done all that work for you for free.
So what happens if I go directly to a lender? Think of it this way: If you went into McDonalds, will they tell you that a Subway Sandwich is better for your personal circumstances? Banks are great but when you're shopping for a mortgage, it's not a very wise move to go directly to a bank without weighing your other options. Banks can only offer you the products in their line-up so you're potentially missing out on a better deal from another lender that could help you save a significant amount in the long haul.
Even if you find a lender online, you should be very careful in analysing that option because the devil is always in the details. Remember: Once you put up an application to the lender, that’s now on your credit history. If there’s any hiccup, it’s going to affect your situation going forward.
With that being said, it is beneficial to do some research before the meeting with your broker, just to get a sense of what’s on offer for the type of mortgage you’re applying for. Some clients may even go to the bank first as a general enquiry. So you’ve got some research up your sleeve to have a productive session with your mortgage broker.
Nothing will give you a broader perspective than speaking with a mortgage broker. Brokers stay up-to-date, observe and document all the latest rules, regulations and products religiously. This of course will lead to a more structured approach as well as a better strategy when it comes to getting you a home loan. Plus they have sophisticated software, intel and relationships that make the entire process much quicker and as stress-free as possible for you.
Using a mortgage broker doesn’t mean you just have to sit there and be very still and let them do all the work. If you find a loan option that you think might be better, before deciding on anything, have a discussion with your broker and just be transparent about it and ask them to help you compare. Sometimes people are drawn to cheap rates but underneath the front cover, they will find a lot of other things that don’t apply to their case so they wasted all this time. Hence why people take confidence in using a mortgage broker because they can uncover all those since they have been dealing with it every single day for years.
Your brokers are simply recommending those options that are going to work for you with their rates, fees, offset account,...etc. They’re not choosing the loan option for you. It’s up to you to decide which one looks the most appealing. Once you’ve got that loan, you should be reviewing it every 6 and definitely 12 months anyway. It doesn’t mean that you’re gonna be with that lender for life. Nothing’s stopping you from going with what’s best for you.
Those are some of the reasons that naturally lead us to using a mortgage broker when we want a mortgage, if we’re being completely honest. Feel free to share with us your opinions in the comments section.