One in every two home loans in Australia (51.5%) are written by a mortgage broker. In fact, mortgage brokers managed 67% of the growth in the national mortgage market in the year to September 2014, handling $37.7 billion of the $56.2 billion increase in home loan lending. So what exactly does a mortgage broker do?
Essentially a mortgage broker is the go-between; the person between the borrower and the lender who negotiates the loan on your behalf with banks, credit unions and other credit providers to arrange various types of loans. They also have the knowledge around specific requirements with various lenders to cater to specific circumstances to provide you with the best chance of getting an approval.
With such a vast range of lenders and credit providers to choose from it can be difficult to decide on the right loan to suit your needs and this is where a mortgage broker helps. Your mortgage broker will do all the legwork for you. They can help you to find out about the most suitable loans or credit packages as well as arranging special deals. Your mortgage broker will be able to conduct research on the hundreds of available loan products on offer and then support you through the application and settlement process.
The benefits of engaging a mortgage broker
- They can tell you which lenders will be able to provide the right loan at the best interest rate
- A good mortgage broker will understand the product and policy niches with the lenders and be able to adapt to different client circumstances and situations
- A mortgage broker provides you with one central point of contact for your mortgage information
- They will walk and talk you through the entire process
- A mortgage broker can help with the finance for your next home, buying an investment property or refinancing your existing home loan
- Experienced and specialist brokers can source lending for commercial properties, business and SMSF lending, meaning you only have to deal with one person
- They negotiate with the lender to secure discounted rates, special terms and accurate valuations
A mortgage broker will assess your financial circumstances, find a suitable loan and manage the application process as well as providing advice at every step.
Mint Equity doesn’t charge for our services as we are remunerated by the lender you select on settlement. However some brokers do charge a fee for their service and they should always provide an upfront quote for their service.
How to select a mortgage broker
In a highly competitive industry, finding a great mortgage broker can be difficult. Like any service offering you want someone knowledgeable and responsive, after all a mortgage broker is there to help support you in the biggest purchase of your life. So it pays to check their background before you engage their services.
Check their resume
Learn about your mortgage broker’s career history. If their career history is not related to banking or finance then it’s unlikely they are going to know all the nuances of lending. A major financial institution recently advertised the fact that their brokers ‘are just like us’ showcasing a florist who is now a mortgage broker. It’s a bit like finding that your surgeon used to be a mechanic, so rather than find out the hard way if they are any good, take a look at their career history and if it doesn’t scream ‘I know finance’, move on.
Check their credentials
Mortgage brokers must have a credit license or operate under an aggregator’s credit license. They should also be a member of an industry association like MFAA. Industry associations have strict admission requirements based on experience and education including police and background checks.
Find a mortgage broker that will add value
The real value of a good mortgage broker is to help educate clients on the options and lending strategies that help them achieve their goals. Savvy property owners and investors need vision and solutions that suit short and long term goals – and a good mortgage broker should help create the opportunity to make smarter financial decisions. Test them before you commit and give them ‘what if’ scenarios to see if they can think outside the box.