Should I Use a Mortgage Broker?
Mortgage brokers are everywhere and are becoming a common factor in the house buying and selling process. Should you use one? Firstly - you do not need to use a mortgage broker! The process of applying for and getting a home loan can be done by you and is a fairly straightforward process.
So what can a mortgage broker do for me? A good mortgage broker will use their experience to review your financial situation and get the best home loan deal for you. They will start by collecting details of your financial situation and copies of documents needed for applications.
Once they have all this information the mortgage broker will be able to determine who is likely to give you a home loan. They will usually narrow this down, performing a home loan comparison that takes into account all the information they know about you and then present you with a couple of good home loan options. You can then do your own home loan comparison using the mortgage brokers suggestions and make a decision.
The mortgage broker will also look at home loan interest rates. The current interest rates on offer at banks will be a big factor, but not the only factor, in the mortgage broker’s analysis of the best home loan offer for you. Often a mortgage broker can negotiate a better home loan interest rate then that advertised by a bank. The mortgage broker will work with you to determine a home loan structure i.e. how much to fix (at what home loan interest rate), and how much to float.
This is great! Especially if this is your first home loan or you are unfamiliar with borrowing, interest rates, mortgages or home loans. The process of getting a home loan can seem complicated, and a bit scary! And a good mortgage broker can definitely help you smooth out the bumps and explain the confusing bits.
A mortgage broker can potentially save you tens of thousands of dollars during the life of your loan by negotiating on home loan interest rates, structuring your loans, negotiating bank charges, and recommending products to best fit the way you manage your money.
Not every bank will necessarily say yes to your finance application, but it is the job of the mortgage broker to know which ones will and what information is required for the loan application. So if you are not a ‘perfect’ borrower, a mortgage broker will know who the best lenders are to approach to get the mortgage you are after.
Particularly if you are having trouble getting finance, if you are not feeling confident about negotiating with your bank, if you feel that you could do better but don’t know the right questions to ask, if this is your first home loan, or you just don’t have the time to shop around, a mortgage broker can be a good choice.
However, most mortgage brokers only get paid if you take out a mortgage through them, this makes them ‘invested’ in your house purchase. You need to remember this and be aware that you can only 100% trust the advice of people that have nothing to gain from your house purchase going through.
Recommendations of property valuers and building inspectors should not come from your mortgage broker. Also, make sure you are comfortable with the amount of lending on offer. Some mortgage brokers are almost too good at their jobs and can get you approvals for amounts of money that make your head spin!
Make sure you know your limits and stay in your finance comfort zone! You do not have to take up an offer of a home loan that your mortgage broker has arranged for you! If a finance offer is unacceptable, you can get your mortgage broker to try again.
Most importantly! If you are not comfortable with your mortgage broker do not hesitate in changing mortgage broker or working with the lending institutes directly.
Finally, not all banks will deal with mortgage brokers, so if you want a BNZ home loan or a Kiwibank home loan, for example, you will only be able to approach these banks directly.