It’s tempting isn’t it? To have someone else do all that tedious research and shopping around for you? And really they should be in a good position to get you the best loan. But are there any drawbacks you should be aware of?
What a mortgage broker can do for you
- Time and hassle: a mortgage broker can save you a lot of time by doing the shopping around for you.
- Expertise: because mortgages are his or her daily fare, your broker will be familiar with the differences between loan products and be able to explain those differences to you.
- A better rate: a broker will know which lenders are most aggressive in which areas and may be able to get you a better rate
- Securing the loan: brokers will be familiar with each lender’s loan criteria. Particularly for first home buyers, unusual loan requirements, or those with less than perfect credit histories, this can make the difference between getting a loan and missing it.
- Service: brokers are often more service oriented than employees of lenders. This can be particularly useful if there is some urgency attached to securing the loan (so you can bid on a particular home, for example).
So what’s the catch?
Mortgage brokers are generally paid commissions by lenders, and different lenders may pay different commission levels, so some brokers may be tempted to show you the loans that are in their best interest. This doesn’t mean you shouldn’t use a commission based broker, but if you do, don’t assume you’re receiving unbiased advice.
In any case most brokers are limited to a list of lenders so you won’t necessarily see all the loans available.
But it’s pretty easy to deal with these drawbacks
We suggest speaking to at least two (preferably three) service providers in any situation, so if you speak to at least one bank directly and a mortgage broker (or to two mortgage brokers) you should be able to avoid the limitations.
Regardless of whether you deal with brokers or direct with lenders, check they’re licensed. Search on ASIC Connect’s Professional Registers or phone ASIC’s Infoline on 1300 300 630.
What are your thoughts?
Are you planning to enter into a mortgage soon, or to refinance one? Do you think a you might use a broker? Is there anything else you’d like to know about mortgage brokers or borrowing in general?
Join the conversation — leave a comment below and let us know what you’re thoughts are.