It may seem obvious to some, but those new to the Real Estate industry may be unsure of firstly what mortgage broking is and secondly whether they even need a mortgage broker. So let us clear it up.
What is a Mortgage Broker?
A mortgage broker is essentially a ‘go-between’ who works with banks or any other type of lender to arrange and secure a home loan for you. In saying this, a GOOD Mortgage Broker does much more. Arranging a securing a loan is the relatively simple part, it is all the in-between work that can prove timely. A great Mortgage Broker that goes above and beyond will work to understand your needs, goals and of course your budget. Using this information, they will work to find options that suit you and your situation best. In addition to this, a good Mortgage Broker will also keep you in the loop by explaining how each loan works (interest rates, features, fees, etc.) and follow through with you from loan application right through to settlement.
Bank or Broker – what is the difference?
Depending on who you speak with, you will receive mixed opinions on whether it is better to go through a bank or broker when attempting to secure a home loan. There is not a right or wrong answer, it solely depends on your situation and what suits that best. In terms of the facts, here is what we know:
Mortgage Brokers are not aligned with ONE lender and so as a result can potentially offer a broader range of rates from a wide range of financial institutions, which gives them more scope to find the right loan to suit you. A broader range of rates = more choice for you. They also have experience working with a variety of lenders so can provide insight and comparisons between them quickly and easily.
The main benefit of securing your loan through a bank is the fact they will know their products and rates back to front; instead of having their knowledge spread amongst a wide range of financial institutions. However, this can be a double-edged sword as banks will not advise you whether there is a better deal being offered elsewhere. In saying this, there are benefits in securing your home loan through the same bank in which you usually bank at including; discounts, better rates, etc. A bank will also of course have a profound understanding of all aspects of borrowing money and will be able to provide you with all the extra information and tips you may need.
Here at Lofty Building Group, no matter what path you choose we are here to help you and can provide recommendations for both banks and brokers. We also advise you to ask friends and family about their experiences and learn from that. Our other piece of advice would be to speak with multiple lenders and brokers to find the right fit for you and your personal situation.
How does costing work?
In terms of costing, Mortgage Brokers often get paid on commission from the lender. Since all Mortgage Brokers work slightly differently, it can be difficult to give a definite answer on costing. Most mortgage brokers do not charge a fee, but it is wise to ask each time as there are some that certainly do. Whilst the idea of paying no fee sounds appealing, it only heightens the importance of finding a Mortgage Broker that you trust will provide you with the loan that benefits you most. Once again, our advice is to do your research well and to shop around. This will help ensure you do not end up with a dubious Mortgage Broker who will choose the loan that benefits them best by providing the most commission.
Regardless of whether this is your first home buy or your 50th, ensuring you secure the best loan possible is vital. When you employ the right one, a Mortgage Broker can be extremely beneficial in saving you money AND time. Stay informed and ask the right questions such as:
- Do you offer loans from a range of different lenders?
- How do you get paid for the advice you are giving me? Does this differ between lenders?
- Why did you recommend this loan to me?
- What fees will I have to pay when taking out this loan?
- What features (options) come with this loan? Can you show me how they work?
- Can you show me a couple more options, including one with the lowest cost?
- What is the threshold for lender’s mortgage insurance (LMI) and how can I avoid it?
- What information do I need to provide for the loan application?
Once again, Lofty Building Group is here to help, regardless of the lender path you choose, so what are you waiting for, let’s get down to Mortgage Broking.
If you would like to speak with us about Mortgage Broking or anything for that matter, please get in touch via our website.