Join us for part five of our myth-busting blog series as we address some misconceptions about mortgage brokers.
In a recent Aussie survey, we found out that three in five (61%) home buyers think getting a home loan through a mortgage broker will cost them more because of the commission mortgage brokers get paid. No, no, no!
This is one myth that absolutely needs to be busted.
Most mortgage brokers don’t charge you for their time. But like all businesses they need to make money somehow so they can continue to operate.
Mortgage brokers typically make their money through commissions which are paid by the lender you choose. The commission is normally a very small percentage of the loan you take out. It is not added to your loan or paid by you in any way, and it doesn’t affect the interest rate or fees you pay for your mortgage.
In fact, a mortgage broker can save you money, and in several ways.
Better interest rate
First, a mortgage broker can help you find a loan with a lower interest rate. Even a small difference in interest rate can save you thousands of dollars over the life of a home loan. Your mortgage broker can even ask your current lender to give you a better rate.
Right loan structure
A mortgage broker can share with you basic strategies to help you pay off your home loan sooner, such as make fortnightly repayments instead of monthly repayments, or put savings in an offset or redraw account to reduce the interest charged on your home loan.
Less fees and charges
Mortgage brokers intimately know lenders and their products. This means they know which lenders have special offers and which lenders have no fees or low fees, which can also save you hundreds or even thousands of dollars.
While there may be a very small minority of brokers who try to charge an upfront fee for their service, this is the exception and not the rule. Your mortgage broker should explain their fee or commission structure to you upfront but if they don’t, just ask them!
TIP! Visit your bank and find out what they will offer you. Then, make an appointment with an accredited mortgage broker to get a second opinion. By comparing the two you should be able to see for yourself that mortgage brokers are actually all about saving you money, not costing you money.
Was your mortgage broker able to save you money? Share your experience in the comments below.
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