Six Reasons to Use a Mortgage Broker
The growth of home loans arranged through mortgage brokers has increased greatly of late – Australia is rapidly catching up on the US and UK in its use of brokers. In fact, around half of all home loans are now arranged by a mortgage broker.
Here are six reasons why people are using brokers, when they could go to their own bank and get a perfectly good deal.
Through a broker, homeowners have access to a much wider range of home loan options than if they went to their local branch. This is because most brokers have access to a panel of around 30 lenders. These lenders range from the Big Four, interstate lenders (such as Bank of Melbourne or Adelaide Bank), well known lenders who only go through brokers (AMP & Macquarie) and specialist in-house lenders.
2. Ease of Use
If work commitments make it hard for you to find time to get to a bank for a home loan, a broker could well be the answer. Many brokers are prepared to visit clients at home out-of-hours.
3. Commitment (of the broker)
Most brokers get paid commissions for arranging a loan. This means that they are committed to sorting out your finance. Your home loan application is more likely to go all the way with a broker than when you approach a relatively junior home loan manager in a branch whose hip pocket is not directly affected whether you are approved or declined.
Good brokers know which banks are hungriest for business. Chances are that, if you went to your branch, you would pretty-much be offered a take-it-or-leave-it deal. Brokers can shop around to get you the best rate and have access to banks’ ‘pricing teams.’ With these teams, brokers can negotiate a sharp rate for you.
5. Product niches
Not all banks are the same. For example, NAB won’t lend of a property which is subject to Company Title and ANZ won’t lend more than 90 per cent of the value of a property if you have not had a credit facility with them for more than six months.
Good brokers know the relative niches of each bank and are able to place customers where they are most likely to get approval.
6. The ability to place the hard-to-house home loan
Lo-Doc loans are still used; often by people who have not filed tax returns or whose credit history is imperfect. There are specialist lenders, such as Pepper and Liberty, who offer competitive products for these clients. These lenders concentrate much of their effort in going through brokers.
The banks are neutral on who brings them the business; it could be a broker who gets paid a commission, or it could be an in-house loan manager who gets paid a salary.
Either way, brokers can access loans that are at least as good as anything from a bank branch. Often they are better than what a branch can offer.
Doug Daniell – Director, Chan & Naylor Finance Australia
Graeme Salt – National Client Finance Manager, Chan & Naylor Finance Australia
Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.