Why would you use a Mortgage Broker?
Bank vs Broker
Why would you seek out the services of a Mortgage Broker when you could go direct to the bank?
Best Interest Duty: The best interests duty (BID) for mortgage brokers is a statutory obligation for mortgage brokers to act in the best interests of consumers, and to prioritise consumers' interest when providing credit assistance. Every recommendation, every discussion and every option that is presented must be recorded with detailed reasoning attached. Consumers files will be intermittently audited to ensure that Mortgage Brokers are following the new legislation precisely. We MUST act in the consumers best interest if we want to continue to operate and avoid heavy penalties. Banks do not fall under this legislation. This means that if you go direct to a bank, they can act in their own interests ie present expensive options that might not be suitable, and not act in the best interest of the borrower. The legislation applies only to Mortgage Brokers, not banks.
More Options: If you go direct to the bank, you will be presented with a couple of loan products that they have on offer. The loan writers have targets they are expected to meet and they will present options that will benefit the bank the most. Expensive products, with loads of features that attract high fees may not be in your best interest, however, as discussed above, the BID laws do not apply.
If you go to a Broker, you will have thousands of different products to choose from. A Broker will sit down with you and go over all of your goals and needs in detail during the consultation, to ascertain exactly what it is you are trying to achieve. The Broker will then go away and do in depth research based on this information. When products are finally presented to you, they will be in line with everything that you stated was important to you. The final product you choose will be the one that is the bet fit for you.
Information and Education: When you see a Mortgage Broker, you will be given all relevant information that may apply to your circumstance, including the various Government schemes, Grants, and incentives. You will also be informed of any promotions offered by the various lenders such as cash-back offers, interest rate promotions, mortgage insurance discounts or specialist professional packages. You will be given as much information as you need in regards to features, repayment types and the different types of home loans to assist you in making an informed decision. A major part of a Mortgage Brokers role is to ensure the client is educated and well equipped to select a product that will best suit their needs.
Credit Scoring: This is a big one that most people don't consider. When you shop around from bank to bank, often times the bank will do an upfront credit check at the start of the conversation to see if the client is a low enough risk to fit within their policies. Consumers will often not even realise that a check has been done until much later. When a bank runs a credit check, it will mark your credit file as an enquiry, regardless of whether you took up the finance or not. If you go from bank to bank and each of those lenders runs a credit check, you are very quickly running a tally of enquiries. These enquires will in turn affect your credit score. Around 8 enquiries is ok but any more starts to have a negative impact on your score, hindering your chance at securing finance in the future. Shopping around for finance is a huge mistake people make as they don't realise that every credit provider will mark their file. This includes all financial institutions - credit cards, zippay, zipmoney, car finance, personal loans etc etc.. You can see how easy it would be to acquire 8 or more in 5 years. If you see a Mortgage Broker, they can run a check on your file without marking your report with an enquiry. This is because they are not a lender. The Broker will be able to shop around on your behalf without a single enquiry being added to your file. This also applies to car finance, and personal loans. For more information on credit files check out this LINK
Bank Policies: With so many credit policies and guidelines, it is almost impossible for a consumer to know which bank is going to be right for their particular circumstance. You may walk into a branch that you have banked with your whole life, expecting to get an approval, only to find out that they you don't fit within their policies for whatever reason. Mortgage Brokers will be able to tell you who will lend to someone who is still on probation, who is great with construction, who will take family allowance or child support as income, who will accept a large rural block or a tricky postcode, and who has the most generous borrowing calculators. There are thousands of reasons to choose one bank over another and the policies are literally changing daily. Brokers get notified of every policy change and can quickly steer you in the right direction so that you won't get a decline for not knowing one of their rules or restrictions.
Post Settlement Service: - Once your loan settles with your bank, their job pretty much ends there. Mortgage Brokers, however have a lot to do post settlement. You will be able to receive updates on new products, rate discounts, government initiatives or even market updates. Most brokers also offer their clients Annual Reviews, where they will check in with you to make sure you are still happy with your loan, update any additional goals you may have and ensure your current loan is in line with your goals, run pricing discounts on your behalf and just ensure that you are happy and satisfied. These reviews should be done every year around the anniversary of your settlement. You Mortgage Broker will also keep an eye on your fixed rate expiry dates and get in contact with your prior to see what you would like to do at the end of the fixed term. They can submit variations or top ups on your behalf and basically be your personal contact for anything you need post settlement.
If you have any questions regarding the use of a Mortgage Broker, please get in contact with us today.