Mortgage brokers are go-betweens in helping people find home loans. Mortgage brokers write about half of all home loans in Australia. It’s important to know the pros and cons before using a mortgage broker.
What do they do?
The mortgage broker process goes something like this:
- They assess your total finances, debts, credits, and assets, to understand your position.
- They evaluate your credit worthiness and estimate what you can borrow. This information also helps them determine how easy it will be to get an approval for you.
- The data they accrue helps them work alongside you to help find the most suitable loan.
- After they make the appropriate assessments and evaluations, they offer you as many options for home loans from their network of lenders.
The pros and cons of using a mortgage broker
Here are some reasons you might want to consider mortgage broker services:
- Mortgage brokers save you time by handling all the research, preparing paper work, and acting as a liaison between you and lenders.
- They save you money with their access to a huge network of lenders and the possibility of getting a better rate.
- Brokers can find a customised solution to present offers that suit your financial needs.
- Expertise in the mortgage industry is an invaluable asset that helps them help you understand the loan process.
- Mortgage brokers work on commission, so you don’t pay for their expertise unless they get you a loan.
- They can help those who can’t get conventional loans.
Like with any financial service, there are some downsides like these:
- Mortgage brokers get paid commissions from the lenders, which isn’t necessarily a bad thing, but it can make them lean toward the lenders. They aren’t obligated to find you the best deal unless they agree to do so.
- Cheaper loans are out there for you to find. Not all lenders pay commissions, which might relate to lower rates.
- The service quality of brokers varies, so be aware that the level of service you get depends on the broker you choose.
- While brokers are mediators between you and lenders, they act on behalf of their lenders because they are paid by them. Some brokers might be tempted to show you only loans from lenders that benefit them more than you and exclude the better deals.
When choosing a mortgage broker for a home loan, make sure they have the qualifications, experience, expertise, and reputation to help you find the best deal on a loan. Ask them how many lenders they work with, if they work with lenders that don’t pay commissions, and make sure they know you have done your homework before coming to them. Ask brokers about their fees and commissions and shop around until you find the one that suits your needs. If you do your research, mortgage brokers can be an ideal resource for helping you save time and money on your home loan.