When purchasing a property, you generally have two options. On the one hand, you can go directly to the various lenders to compare all their mortgage rates and options yourself. On the other, you can enlist the advice and services of a mortgage broker.
So, the question is, what is a mortgage broker, and what exactly do they do, and why you need a mortgage broker? This post addresses those questions as well as why you should use a mortgage broker when you’re looking to buy a property.
A mortgage broker is an individual or company that acts as an intermediary between someone who wants to purchase property and financial institutions, such as banks and credit unions, offering the home loans that will allow them to do so.
A mortgage broker works is connects home buyers with lenders who can provide the necessary funds.
First, the mortgage broker collects information from the prospective borrower. This includes determining the type of property they want to purchase, their financial situation, and how much they want to borrow. The broker will then present the borrower with their options and how each type of mortgage they might be eligible for works, how much they cost, and how the loan repayments will be structured.
With this information, the mortgage brokers will conduct a credit check to determine what type of mortgages the individual may be eligible for. From there, they’ll take the loan application to multiple lenders, who best fit their client’s needs and creditworthiness, to secure the best possible rates for them.
Finally, the mortgage broker will help their client complete all the necessary paperwork, gather and submit it to the most suitable lender and work with all involved parties to complete the purchase quickly and smoothly.
Smoothly and quickly purchase with mortgage broker
As mentioned at the start of this post, you don’t have to work with a mortgage broker when buying a property – you can go directly to lenders if you so choose. So, with this as an option, why use a mortgage broker at all? Here are five benefits of using a mortgage broker:
Talking to multiple lenders is likely to be time-consuming, confusing, and potentially discouraging. When you use a mortgage broker, they’ll do all this work for you and present you with the best offers they can find. A broker is a professional in their field and they can explain your options to you in layman terms avoiding the usual lending jargon (offset accounts, redraw, fixed rates, rate lock, split loans etc.).
Another significant benefit of a mortgage broker is they have access to lenders that you don’t – as some lenders only work through brokers.
Consequently, having access to more lenders allows for the possibility of exclusive mortgage rates that you wouldn’t be offered otherwise. Additionally, brokers may be able to secure better rates than you’d get by yourself due to a long-established business relationship and/or the volume of business they bring to the lender. A broker can negotiate on rate through their relationships and have access to all the same products as offered by the banks directly.
Borrowers generally have to pay several fees when processing a mortgage, such as origination, application, and appraisal fees. Fortunately, in some instances, a mortgage broker might be able to persuade a lender to waive these fees. A broker can identify your borrowing capacity with various lenders rather than just one lender. This is important as your borrowing capacity can vary from bank to bank. This can increase your borrowing capacity considerably and increase the number and types of properties in your price range.
Alternatively, because the best mortgage brokers always have their ear to the ground, they can advise on any government grants or incentives you may qualify for.
A mortgage broker will sit down with you to understand your needs and situation as fully as possible, so they can go out and secure you the best mortgage rates. Better still, skilled and experienced mortgage brokers will assess your financial circumstances and seek out areas where small adjustments could significantly increase the chances of a successful mortgage application.
A mortgage broker could be paid through the borrower, via various fees, or by lenders who pay them a commission for referring a client, i.e., originating a loan.
In the event that you’re required to pay broker fees, the total amount will depend on the type of mortgage, the amount borrowed, etc., what broker is used, and how much the broker is earning in commissions from the lending institution. Subsequently, when consulting a mortgage broker, confirm their fee structure as soon as possible.
Now, regarding when the mortgage broker will be paid, they’re usually compensated when the loan is approved and released to the borrower. This means that, generally, consulting a mortgage broker won’t cost you a thing – unless they successfully help you secure a property.
Here are a few tips on what to look for when choosing a mortgage broker to complete a property purchase.
See more: Mortgage broker vs. Bank
K Partners pride themselves in making it a seamless process for their clients from the initial meeting through to settlement. Their team of experts are more than capable of making it an enjoyable journey.
Based on your circumstances they’ll make appropriate suggestions that match your needs and requirements. More importantly they will make sure the loan is suitable and manageable.
K Partners can assist with the following:
Once you’re a client of K Partners they will review your home loan ongoing and ensure you are always offered the most competitive rate by your bank.
Contact us to book your free mortgage consultation
Please note that all the while the information provided above is factual in nature, it’s also intended to apply generally, and to a broad audience. Subsequently, the information hasn’t taken your personal circumstances or goals into consideration.
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