Q. I’m considering buying my first property and am starting to research home loans. I’ve heard about mortgage brokers, but I don’t really understand how they work and what they can offer me above and beyond what I can do myself. Can you explain this to me?
A. Whether you’re new to the property game or an experienced buyer with several properties under your belt, a mortgage broker can add plenty of value to any property purchase.
What mortgage brokers do
In simple terms, a mortgage broker helps you find and apply for a home loan. But they also do much more than that.
Just like your bank or any other lender, a mortgage broker will find out about your personal circumstances, financial situation and property goals, whether that’s a one-off purchase to buy a new home or to play in the investment space.
While your bank will then just compare its own loans, a mortgage broker will compare a range of different lenders and loans to find one that’s right for you. While you can call different lenders yourself and go through the same process with each one individually, a mortgage broker compares all the different lenders on their panel in minutes, saving you time.
A mortgage broker will also explain the differences between loans and do true apples for apples comparisons of loan features, options, fees and charges. You’ll know exactly what you’re getting, helping to avoid nasty surprises.
Your broker will also guide you through the application process including all the paperwork, from pre-approval to settlement, helping to ensure you’ve dotted all your i’s and crossed your t’s.
While experienced buyers might think they don’t need the expertise of a mortgage broker, that’s where they can add the most value. As your circumstances change over time, so can the products and services available to you including what’s more suitable to use. No matter where you are in your property and mortgage life stage, a mortgage broker can help.
While the above explains very basically what a mortgage broker does, below I’ve outlined what I believe are the benefits of using a broker.
Benefits of using a mortgage broker
- They can search their range of loans from multiple lenders very quickly to find you the right home loan for your needs saving you time in doing it yourself
- They will be your central point for loan information and can explain the whole process to you and guide you along the way
- Every lender and loan is unique with different fees, charges, options and features, and a broker helps you compare like for like to ensure you’re getting the right deal for you
- Generally, mortgage brokers don’t cost you anything, instead they are paid commission by the lender you choose after settlement
- They will calculate your exact borrowings and repayments so you know what you’re up for
- Mortgage brokers work daily with many different lenders, so they have inside knowledge on the lending process, including application approval times if you’re working to a tight timeframe
- Insider knowledge on which lenders will negotiate or potentially offer discounts below their advertised rates (Tweet this!)
- Provide free reports on suburbs or specific properties you’re considering, helping with your property search
- They can show you ways to save money or reduce your loan term
- There is no obligation with mortgage brokers, so even if you use them to get another opinion and compare loans and lenders for you, you don’t have to take a loan through them
- They can discuss your insurance needs
- Help you through the whole process, from researching and selecting through to applying and settlement, including the paperwork, explaining Lenders Mortgage Insurance (LMI), stamp duty, government grants and…
- Many will meet you at a time and place convenient for you, whether that’s home, work, a store or your favourite local café!
It’s important to be aware that not all mortgage brokers are equal, so be sure to use one that is fully accredited by the Mortgage and Finance Association of Australia (MFAA). Choosing a home loan is one of the biggest financial decisions you’ll make in your life, so why not get free expert home loan advice?
Do you have a question for John? Leave it in the comments below and check back each Sunday to see if your question has been answered!
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