The growth of home loans arranged through mortgage brokers has increased greatly of late – Australia is rapidly catching up with the rest of the world in its use of brokers. In fact, over 60% of all home loans are now arranged by a mortgage broker.
Here are seven reasons why people are using brokers.
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 Banks (CBA, ANZ,Westpac, NAB), Non- Bank Lenders, interstate lenders (such as Bank of Melbourne or Adelaide Bank).
In fact there are some well known lenders who only go through brokers (AMP & Macquarie) and also specialist in-house lenders.
2. No cost to you
Prosperity Mortgage Brokers don’t charge you for their time but rather they get paid a commission (fee) by the lender as payment for introducing customers to them.
The lenders have worked out that this makes good business sense as a paying brokers commission is a variable cost as opposed to the fixed costs of having to maintain a team of highly paid employees, branch networks and other infrastructure expenses.
It’s a win-win-win for clients, brokers and the lenders!
In fact, for some lenders, brokers are the only source of new customers.
3. Save time
When you’re time poor the last thing you feel like is shopping around for the best home loan. Where do you start? Most people give up after a talking to a couple of banks.
Brokers do the hard work and make it easier for you. Just provide your information once and let the broker do the rest.
Many brokers are prepared to visit clients at home or at their work out-of-hours. Would a Big Bank do the same?
4. Commitment to you
Brokers only get paid when the loan settles (completes), hence they are committed to sorting out your finances.
Your home loan application is more likely to get approved (and with more care) with a broker than when you approach home loan manager or mobile lender in a branch. To a branch staff employee you are often “just another client” whereas a broker has a vested interest in serving you well so hopefully your refer your friends and family!
5. Get a better deal
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.
6. Product niches
Not all lenders are the same. Some prefer first-home owners whereas others prefer investors. Some won’t lend for certain type of property (e.g. Company Title) or in certain postcodes.
Each lender has their own niches and brokers know this and are able to place customers where you most likely to get approval.
7. The ability to place the hard-to-house home loan
Each borrower is different and not all fi t into the mainstream lenders’ criteria (which is often inflexible). Also for the self-employed it is often difficult to gather all the required financial information the banks need. For some, their past history may impact their “Credit Score” and make it difficult to get a loan. Hence there are specialist lenders that cater for the “hard-tohouse” loan and offer competitive products suited to those borrowers who may find it hard to deal with a “normal” lender.
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Mick Butler is a Lending Adviser with over two decades of experience working within all aspects of the banking and financial services sector. This has provided him with a proven track record and extensive understanding of the home lending process from the initial client meeting through to loan settlement and funding.
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