What a mortgage broker does is shop. I know many people have dreamed of having someone to take over the arduous role of shopping for them. Usually it’s just the groceries but the desire sometimes extends to birthdays and Christmas. But what about if it was about shopping for money?
A mortgage broker will shop specifically for the best deal on a mortgage for you. And guess what? You don’t even have to pay them, as they take their commission for getting you this great deal from the lender. How amazing is that?
It’s not seen as kosher in the world today to haggle over things, but as we’ve become an increasingly cashless society, we’re out of practice at asking to get things cheaper. When exploring an exotic bazaar, today’s shopper might just end up paying full price for that hand-tufted carpet, because asking for it cheaper might feel, well, a bit sleazy.
However, mortgage brokers know the lenders so they have a more complete picture of what’s on offer. A good broker works with you and understands what you can afford and what you’re hoping for. They aren’t scared to challenge banks and lenders over rates because, just like that bazaar, they know they’ve got the power of choice so they’re happy to just walk away if the price isn’t right. Meanwhile, they saw that exact same carpet cheaper a few stalls back, and the seller was throwing in a free gourd.
So if that’s what a mortgage broker does, why on earth wouldn’t you use one? Because you potentially have a choice!
As soon as you have a clear goal to buy property, it’s time to either enlist the services of a mortgage broker or go directly to your bank/lender’s home loan department to see what they can offer.
If you’ve got a good historic relationship with your bank or lender and you’ve already established a clear ‘safe word,’ then you might just go straight to them, lay your cards on the table and ask, “What can you do for me?” before even considering chatting to a mortgage broker.
It’s true that often cutting out the middleman and going straight to the source can be beneficial timewise and financially. If you get the handshake right and keep eye contact so they don’t get spooked, you might just walk away with a good deal. Remember though that going directly to your bank will only offer you the home loan packages specific to that bank or lender, nothing else. On the other hand, a mortgage broker can shop from the entire market.
If you fall into the category of a first-time homebuyer, most banks (specifically) require you to have saved a 20% deposit. So when a buyer falls short of this deposit amount and has neither the ability to secure a guarantor home loan or the option to make a hefty withdrawal from the Bank of Mum and Dad, then a mortgage broker might become essential, as it’s a mortgage broker who will be able to hunt around to find you a lender who can offer you a loan with the money you actually have.
Fortunately, with an increase in lenders like Sucasa, this 20% prerequisite may be set to go the way of the dinosaurs. Some lenders are now structuring their loans to compensate for any deemed shortfall in the initial deposit. You might even benefit from shopping around for lenders before you approach a mortgage broker, as many lenders like to cut out the middleman and work directly with their clients, plus don’t even accept broker applications in the first place.
Ultimately, whichever way you decide to go, choosing a home loan that fits is a very personal choice, much like your shopping. You might be the type of person who excels at it, revels in it even. Or you might just want to play to your own strengths in the challenging game called buying a house and delight in hand-balling the whole loan-seeking job to someone imminently more qualified than you.
