The process of applying for a home loan is simple but choosing the right home loan for your circumstances needs thorough research and a decent understanding of the mortgage market.
If you’re hard-pressed for time or think you could benefit from some expert guidance, it could be worth speaking to a mortgage broker to understand your options better.
What is a mortgage broker?
In the simplest of terms, a mortgage broker is a finance professional that acts as a conduit between borrowers and lenders. Mortgage brokers work with several lenders and use their knowledge and connections to match borrowers with the right-fit loans for their requirements. This doesn’t mean that working with a mortgage broker can ensure your home loan application will get approved, but it can certainly reduce the chances of rejection.
A mortgage broker will work with you to understand your financial situation and goals and accordingly suggest home loan products that match your needs. They can also suggest offers from lenders who are more likely to approve your application if you’re a non-standard borrower, such as someone with an average credit score or a self-employed professional.
If you’re considering working with a mortgage broker, make sure that the broker you choose is registered with ASIC. It also helps if they are members of some relevant industry bodies, such as the Mortgage and Finance Association of Australia (MFAA), the Finance Brokers Association of Australia Limited (FBAA), and the Mortgage Industry Association of Australia (MIAA).
How can a mortgage broker help you?
Whether you are a first home buyer or a property investor, a mortgage broker can simplify your home loan journey by suggesting the right products and competitive deals for you.
Here are a few things that a mortgage broker could help you with:
- Crunch the numbers with you to understand how much you can afford to borrow.
- Understand your financial requirements to suggest home loan features that will make it easier to manage your mortgage.
- Suggest competitive home loan deals from various lenders and help you compare the interest rates, fees and other features so you can make an informed choice.
- Give you access to broker-exclusive deals and professional discounts that lenders may not typically advertise.
- Manage the mortgage application process by helping you complete your application and double-check that all important information is included.
- Negotiate with lenders to help you get a better deal on your mortgage.
- Help you qualify for a home loan if you’re a non-standard borrower by suggesting specialist lenders and discussing your case with them to explain your current situation.
How do mortgage brokers make money?
Mortgage brokers can simplify your home loan journey without charging you anything. Yes, you read that right! The services of a mortgage broker are generally free. Instead, they receive commissions from your lender for getting your business to them. There may be some brokers that charge you a small fee in some exceptional cases, but this is quite rare.
It’s also good to know that mortgage brokers don’t provide a one-off service but generally stay in touch with you throughout your loan. A good broker will contact you from time to time to ensure you’re still on the best possible deal for your situation. They can also help you negotiate with your lender or refinance if your circumstances have changed or there are better rates available with other lenders.
Is there any downside to working with a mortgage broker?
The home loan market is flooded with hundreds of options that could be overwhelming for a first home buyer. A mortgage broker can make it easier to compare these options and help you find a product well-suited to your financial situation. However, you may feel that your options are restricted when you work with a mortgage broker. While this isn’t necessarily true, you should know that brokers generally work with a selection of lenders and can only suggest products from these lenders. If you’re worried that you won’t find the best deals through a broker, you could visit an online home loan comparison site to check what all is available on the market.
Another potential issue could be a conflict of interest, as brokers are paid by lenders. However, there are some rules in place to protect your interest when you work with a mortgage broker.
Mortgage brokers are required to act in your best interests as specified by ASIC. They are legally obliged to consider a range of relevant products to identify options that are best suited for their customers.
