Should I Work With A Mortgage Broker
Deloitte Access Economics recently completed a research report into the value that Mortgage Brokers bring to the banking industry, and the benefits they have on Australian consumers, and the Australian Economy. In the September quarter of 2017, The Mortgage Broking Channel was responsible for writing over 55.7% of residential loans and contributing 2.9 Billion Dollars to the Australian Economy during 2016-17. So, what were the benefits for Australian Consumers?
Brokers Created Competition In The Market, Leading to Reduced Interest Rates
Unlike banks, that are restricted to their own products, Mortgage Brokers have access to a large number of lenders and products. This gives Brokers greater access to products and permits other lenders, without the branch network, to compete in the market. This has increased competition in the industry by allowing smaller lenders to increase their market share over the past 4 years from 21.4% to 27.9%.
What is the Role of The Broker?
In simple terms, Mortgage Brokers are licensed and regulated financial professionals who act as the intermediator between borrowers and lenders. Mortgage Brokers are not aligned to any specific lender or product, therefore they are able to find the most suitable product to meet a client’s specific needs.
The Australian Financial industry continues to become more and more complicated and regulated, which subsequently adds a greater degree of complexity to a loan application. Lenders continue to increase their requirements whilst regulators influence and complicate the application process. Arguably, these developments are necessary to ensure that individuals are protected with a view of ensuring that lenders can understand and meet the individual needs of a borrower.
Banks strategy of further reducing branches and front-end service staff is likely to continue with more and more approval power been given to Head Office personnel, which is why Mortgage Brokers have filled this void. Arguably technology provides online facilities for loan applications, however we have seen that many lenders prefer the trust associated with human interactions when it comes to their financial needs.
Advantages of Using Mortgage Brokers
- Mortgage Brokers offer a broad range of loan and rate options that a traditional bank is not able to do
- A broker will guide you through the entire loan application phases and manage the collection of critical paperwork, preparation of application forms and meeting all of the administrative and supporting documents requirements.
- Mortgage Broker are lending experts who offer a large of range of lenders, loan types and rates for buyers.
- Some Mortgage Brokers can offer value added services specific to individual client requirements
- Mortgage Brokers are generally smaller than banks which makes it easier to establish a more personal relationship.
- You’re not locked into working with a mortgage broker, which makes it easier to move if you are not satisfied with any aspect of the relationship or service.
Mortgage Broker Pitfalls to Avoid
Unlike anything else in life not all Mortgage Brokers are the same, therefore, it is essential to satisfy yourself that they have the expertise to find the right product for you.
An initial meeting with a Broker is a good way of understanding how they work and to get a feel for their commitment to customer service and their ability to get the finance approved within the necessary timelines to meet your requirements.
During a contract, the Mortgage Broker needs to behave as part of a team which includes working with the Real Estate Agent, the Lawyers and the relevant financial institutions. If the broker is not effective in their communication, then the deal can become difficult and get delayed.
Lastly, ensure that you establish a level of trust with your new Broker. A low interest rate becomes irrelevant if you cannot trust your Broker.
Getting the Most Out of Working with Mortgage Brokers
A worthy Mortgage Broker will take the time to understand your loan requirements and will ask pertinent questions to ensure that they have a full picture of your financial position. Whilst this may appear a little intrusive, it should be considered as positive. Without all the information, the Broker is unable to match the best possible product for you.
Often, once the deal is over, your Mortgage Broker may fade into the distance as they chase the next deal with other clients. Before selecting your Broker, ensure you ask your Broker about their post settlement services. A good Broker should be able to fulfil all your financial lending requirements beyond any one deal.
Mortgage Brokers Are There To Help Those Who Need It Most
Mortgage Brokers have been able assist First Home Buyers to enter the market, even with property price fluctuations. Of those who settled a loan through a Mortgage Broker in the September quarter of 2017, 23% of those were First Home Buyers.
First Home Buyers have been able to receive the benefit of education and insight from Mortgage Brokers over the years, providing First Home Buyers confidence when trying to navigate through the complex home loan application process.
And Australians Have Loved Them For It
The work Brokers have done for their clients has not gone unnoticed, with 90% of Brokers customers stating how happy they were with the service they received.
So, if you are considering entering the property market, upgrading or looking to refinance your home loan, having the helping hand of a Mortgage Broker can be extremely beneficial in long run.