Article by Emilee Bezzina – sales agent – Wilsons Warrnambool & District Real Estate
Working in real estate we often get asked if purchasers are better off with a mortgage broker or if they should directly see their bank, some may also shop around themselves for the best deal.
There is no right or wrong way to go about it, if it works for you and you get approved for the right loan then great – you are on your way to purchase your dream property.
A mortgage broker is a ‘middle-man (or woman)’ who helps search for a loan that is suited to you individually as they have access to a panel of financial lenders. A broker is able to sit down with clients and work out their financial goals to achieve the best outcome for every situation, they can be a very useful service, especially for those who need guidance through this very exciting time in their life.
Using a mortgage broker can be beneficial to a purchaser in many different ways, some include:
- Better Rates – A mortgage broker has the negotiating power to find clients the best going interest rates as they are able to compare different credit products.
- A Range of Credit Products – when using a mortgage broker, you have access to a range of different products offered by different lenders, providing you some flexibility.
- Expert Advice – A mortgage broker is able to explain everything to you thoroughly as they are experts in the field.
- No Fees or Charges – In most cases you don’t have to pay for the service of a mortgage broker, they are paid by the lenders for offering their product.
- Saves you time – With the broker doing all the leg work, this saves you time with trying to compare deals.
- Pre-Qualification – When using a mortgage broker, they will pre-qualify you before they lodge an application. This means you won’t be making any unnecessary applications that will be declined, putting a black line against your credit history.
- Brokers are with you every step of the way!
Some potential disadvantages of using a mortgage broker are:
- A Broker’s Interests May Not Align With Your Own – Your ultimate goal in shopping for a mortgage is to find one with an affordable interest rate and low fees. You are in it for the long haul. A mortgage broker, on the other hand, often gets a fee from the lender for bringing in the business. This fee can be based on the amount of the mortgage and will vary among lenders. A broker’s goal, therefore, can potentially be to get you into a mortgage that maximizes their compensation.
- A Broker May Not Source the Best Deal for You – Many home buyers simply assume that a broker can deliver a better deal than they could get on their own, but this is not always the case.
- You May Owe a Broker Fee – Mortgage brokers are paid either by the lender or by you. If the fee is covered by the lender, you might be steered to a more expensive loan because the commission to the broker is more lucrative.
- Some Lenders Do Not Work With Mortgage Brokers – By working through a broker, you may not have access to these lenders, some of whom may be able to offer you better mortgage terms than you can get through the broker.
Whether you source your finance through a broker or directly with the bank, one thing you can’t have too much of is preparation and good information. It is helpful to know your position before falling in love with a property – to avoid heartbreak, and to give yourself the best chance of securing the home you love.
– Emilee Bezzina