23 Jul Mortgage Banker or Broker? Which is best?
Today we’re comparing bankers to brokers, and what the advantages of using a mortgage broker are, or why you might go to a bank directly instead. Now that the industry has changed a lot with APRA on board and policies changing daily, rates moving up and down it’s important to understand the differences and reasons why you should use a mortgage broker.
If you’ve had your mortgage for more than 2 years, chances are you’re probably paying too much.
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So you’ve banked with Commonwealth Bank your whole life and you walk in there to sort your mortgage out, what’s wrong with this scenario? Well, if you’ve got a stable income chances are you can get a good rate with almost any bank. Once thing we’ve found is that banks punish loyalty.
Louis had his loan for 18 months and the banks never did a review, so Jayden stepped in and got his rate down by 0.2%. Which saved him about $1,000 per year. So be aware that banks do punish loyalty and they’re not looking at you individually, whether brokers have a one on one outlook. If you’ve only ever banked with Commonwealth Bank, they’ll put you on the only product they’ve got. Instead, if you’ve got a choice between a few banks, you’ll find the best structure for you.
So how can I find a mortgage broker right for me?
Start with talking to your friends, family and colleagues to see if they know any great mortgage and finance brokers they have dealt with. Mortgage broking is all about word of mouth referral, but it’s also good to look at reviews and case studies to see if they’re helped others who are similar to you.
Does it matter if they’re qualified?
Well would you use a forklift without a licence?Or get in a car with someone who doesn’t have a licence?
Yes, mortgage brokers need to be qualified and you can take initiative to see their qualifications. LinkedIn is always a great place to start, as it lists their experience. At a minimum you should expect them to have a University Degree or a Certificate IV in Mortgage Broking. Equally, they should be licenced by one of the Mortgage Broking industry associations, which are FBAA (Finance Brokers Associate of Australia) or the MFAA (Mortgage and Finance Associate of Australia).
How do you tell if they’re experienced?
Find out who they’ve helped and also look at LinkedIn. Make sure they have case studies and have experienced working with different clients. Another thing to ensure is that they’re still actively in the industry and doing what they say they are, as policies are always changing. Make sure they’re doing lots of deals – awards and accolades are a good indication of this.
Does it matter what banks they use or if they have a choice of lenders?
Here’s an industry secret… A lot of brokers advertise that they have access to over 30 lenders, but generally they can only access two or three banks because they don’t do enough volume. You should ask what lenders they predominately use, and if they are only limited to 2 or 3, ask why they don’t use others and how this will help or hinder your situation.
How much will it cost you to use a mortgage broker?
In general, when it comes to residential loans, banks pay commission to brokers. This ranges from 0.5 – 0.6% upfront. However sometimes with commercial loans and complicated finance it can be a bit different. That’s the industry standard.
If they are going to charge you, mortgage brokers are required by law to detail any commission they receive as a part of the process.
How do you find someone who can help you with structuring?
It comes back to their experience and making sure they ask the right questions, look at what you’re achieving and what your goals are.
- How do you make sure you’re getting the best deal for your loan? Get someone else to do it for you!
- Make sure they’re qualified; you can read reviews and find out about their history.
- The markets change, some banks go up and others down, but one thing is, they all try and put people’s rates up and don’t give you a lot of options. So have a broker working for you and reviewing those rates.