+ Why should I use a mortgage broker to help me apply for a home loan?
Benefit of using a mortgage broker No. 1: The convenience factor
First and foremost, the benefit is in the ‘ease and access of choice’. Using a mortgage broker can allow the borrower to access rates and products from multiple lenders in the market, giving you choice and a true comparison. Without the services of a mortgage broker, the burden of research essentially falls on you.
Unfortunately, still today, according to multiple studies, nearly 70% of Australian’s do no use a mortgage broker. That means 70% of Aussies are either just “trusting their bank has the best product and rate” or are attempting to shop around themselves, directly with lenders. This can be both tiresome and confusing, given that there are now around 50+ bank and non-bank lenders in Australia. Could you imagine enquiring directly with 50 lenders?
Benefit of using a mortgage broker No. 2: One point of data entry
If you choose to ‘go it alone’ you will need to fill our pre-qualification documents with each individual lender, each time you apply. This can be a tiresome exercise when done once, let alone half a dozen times or 50 times if you want to find the best rate yourself without a mortgage broker.
Using a mortgage Broker allows you to do ONE(1) pre-qualification application, that is then typically entered into their aggregator software. Once they have lodged this, the system links with multiple lenders (often 20 – 50 lenders, depending upon who they are accredited to work with) and delivered the best possible rates and loans available from these lenders. You then can sit down with your mortgage broker and determine the best home loan for you.
Benefit of using a mortgage broker No. 3: No extra cost
Many Australian’s do not realise that the services of a mortgage broker is typically (unless pre-stated) FREE of charge. The mortgage broker does not need to charge you a fee because they are remunerated in commissions by the lender they write the loan for.
For example, if you apple for a home loan with a mortgage broker and compare 20 home loans and choose Suncorp Bank to go with, Suncorp bank will pay the mortgage broker a commission for bringing the business to Suncorp Bank. Many people believe that they need to pay a fee to the mortgage broker or perhaps they can get it cheaper if they go directly with the bank, but in most cases this is false. Another reason you may not be able to get a cheaper rate from the lenders directly is that mortgage brokers also provide a valuable service to the lender because the mortgage broker is handling all the documentation and dealing with the clients directly.
Benefit of using a mortgage broker No. 4: Independent Advice
If you bank with a particular bank or lender and then approach them for a home loan, typically they are only offering you ‘their best rate’ that they have for you, not the markets best rate. Similarly, if you already have a mortgage with a bank or lender, I can guarantee you that they are not calling you and telling you another bank has a better rate than them, even if it would be in your best interest to know this.
Periodically sitting down with a mortgage broker can prove to save you thousands of dollars in the long run, purely because you get a ‘whole market’ view of what is available and best for you.
We’ve seen sometimes up to a 3% variance in people home loan rates before we refinance them. For example Sarah was on a 3.65% rate before we found her a 1.95% refinance rate saving her thousands per annum and potentially years off her mortgage. Her bank’s best rate for her was 3.65%, but this was not the markets best rate for her. Without talking to a mortgage broker, she would be overpaying thousands of dollars in interest over the life of the loan.