These days, the choice of mortgage lenders can often feel overwhelming. The differences between them might not feel like they matter now, but what about later on down the track when you need to redraw money from your loan, and can’t? If you use a mortgage broker, however, they will be able to find you a loan that meets your specific needs – whatever they may be.
Mortgage brokers can often help you negotiate a better home loan deal. But do you really need to use one, or are they more hassle than they’re worth? If you’re not sure when to use a mortgage broker (or if you should use one at all), read on! We’ve got all the answers.
What is a mortgage broker and what do they do?
A mortgage broker is essentially the person in the middle working between you and the bank; however, above all they are representing you. Their job is to get you the best home loan deal possible.
The ideal broker should:
· Discuss your needs in depth and understand your financial situation
· Give you an accurate indication of how much you’ll be able to borrow
· Provide you with at least a few home loan options to choose from
· Explain how the process works and what you need to do when
· Liaise and negotiate with the banks, managing the end-to-end application process
· Keep you informed all throughout the process
Most of the time, you won’t need to pay a broker anything. They get paid a fee or commission from lenders.
Therefore, if you do use a mortgage broker, do your research. You should fully understand all the fees and charges involved with each loan option and understand how much they are being paid in commission. Make sure you ask your broker plenty of questions and ensure your needs are being met. For instance, do you need flexibility within your loan to be able to pay it off faster? Or do you want the lowest possible rate? Your broker should be asking you all these questions.
Why should you use a mortgage broker?
A home is typically the biggest investment you’ll ever make, so it pays to get good advice from a broker. That said, there are pros and cons when it comes to using a mortgage broker.
On the one hand, if you use a mortgage broker, they can help you understand the complex lending process, making things a whole lot less stressful when it comes to buying a new home!
They can help you get a better deal that could save you (quite literally) hundreds of thousands of dollars in the long term. Experienced mortgage brokers also have relationships with lenders that can help broker a better deal faster.
On the other hand, mortgage brokers do get fees for brokering deals with lenders – and some banks pay more than others. That means that technically, they might be inclined to recommend a high-commission loan option, even though it isn’t the very best deal you could get. Plus, some lenders offer brokers exactly the same deals as they do prospective homeowners, and if your broker is particularly busy (or they’re new to the game), it might even be faster doing things on your own.
Who can benefit from a broker?
Mortgage brokers can help property buyers of all ages and levels of experience to get better home loan deals. In fact, if you’ve already built a relationship with a broker in the past, even better – you know you can trust them.
That said, there are certain buyers that can benefit from using a mortgage broker, such as:
· First home buyers who don’t fully understand the home loan and home buying process
· Business owners or others who might have a complex financial situation
· Time-poor home buyers
· Other home buyers that need a home loan quickly; perhaps they have sold their home and need to buy fast
Regardless of whether you use a mortgage broker or not, it’s important that you do your own in-depth research and consider your options carefully. If you are choosing a broker, check their reviews carefully before committing.
Would you use a mortgage broker? For more industry tips and advice on buying and selling property, check out more of our insights here.