Are you thinking about buying a new home? You’re probably going to finance the purchase with a loan. Right? Are you sure that your bank has the best rates?
If you can’t answer this straight away, let’s take a step back. Buying a new home requires you to either use a mortgage or finance the purchase from your own pocket. However, most of you would prefer to get a mortgage since it allows you to own a home to pay for small installments.
In most cases, your bank will offer you a home loan. And some people prefer using this route because of the relationship they’ve built with their banker.
However, is your bank offering you the best interest rates on your mortgage? Have you compared the best home loans currently available from Australia's top lenders? Can you get a better deal elsewhere?
If you can, why don’t you use a mortgage broker?
Who’s a Mortgage Broker?
According to this mortgage broker in Perth, a mortgage broker is a professional who researches different mortgage options for you and recommends the best option based on your needs, credit profile, and budget.
In return for handling all the work for you, they will charge you a fee, which in most cases is usually a certain percentage of the loan amount you receive. The fee can either be paid by the lender or the borrower.
Advantages of a Mortgage Broker
Working with a competent mortgage broker provides you with the following advantages:
- They help reduce the stress involved with researching mortgage rates.
- They provide professional advice on the amount you are likely to receive and your chances of approval.
- They give you access to more mortgage loan options than your banker.
- They help you reduce interest rates on your home loan.
- They simplify the process of finding the best mortgage rates.
Disadvantages of a Mortgage Broker
After the real estate market crashed in 2008, people started questioning whether mortgage brokers acted to serve their own interests. And for a good reason too, as the following disadvantages will show:
- Mortgage brokers can charge a fee that can go as high as 2% of the initial loan amount.
- Mortgage brokers can be biased towards lenders due to their existing relationships.
- Mortgage brokers could arrange for a mortgage that is not advantageous to the borrower because their interests aren’t aligned.
- For some borrowers finding a dependable broker can be hampered by their location.
Clearly, the advantages of using a mortgage broker outweigh the disadvantages. However, there are some concerning reasons why you shouldn’t use a mortgage broker. And they are reason enough to make most people feel insecure when dealing with a mortgage broker.
However, this shouldn’t be the case. In case you’re really interested in getting the best mortgage rates, there are several measures you can implement on your part to make sure that you nullify some of the disadvantages we’ve highlighted above.
And the good part is, you don’t have to do much. All you have to do is make a few observations and ask a few questions before selecting the most reliable broker.
What Should You Consider?
- How much does the broker charge, and how do they get paid?: Since you’re most likely going to pay a fee, it’s important to know how much is paid and who will pay. Is it you or the lender? Some brokers are paid by your lender. It would help if you were sure that they have no reason to push you to a certain lender so that they can get a bigger pay cut.
- The lenders your broker deals with: It’s important to know the type of lenders that your broker deals with. If your broker deals with an extensive network of reputable lenders, you will likely be offered an excellent deal.
- The broker’s reputation: Most people drop the ball here. It will help if you read online reviews before committing to a broker. It helps you know whether the broker has their client’s interests at heart.
- What services is the broker offering?: You need to ask questions to understand better the services you are being offered. Knowing these things upfront will help you pick a broker who can satisfy your needs.
- Are they responsive to your communication?: Establishing a good communication line with clients is a sign that a broker is responsible. And that is the type of mortgage broker you’re interested in.
So, what’s the verdict?
There is no reason why you shouldn’t hire a mortgage broker. After all, at the end of the day, you’ll end up with excellent mortgage rates and a house perfect for you.