If you’re trying to get a home loan, you probably have some serious concerns.
And at this point, you may have even heard a lot of conflicting information about mortgage brokers.
So let me be clear: a mortgage broker is definitely the right choice for securing a home loan.
Because a mortgage broker can help you structure your home loan the right way from the beginning, which saves you time getting the loan and paying off your mortgage sooner.
Still, you might have some lingering questions. That’s why we’re going to address the three most common misconceptions about mortgage brokers.
1. Don’t Mortgage Brokers Cost a Fortune?
If you go by what lenders tell you, you probably think a mortgage broker will cost you a lot in the long run.
But wait a second – why do lenders say that?
Because they are the ones who have to pay the broker a commission on the loan – something they’d rather avoid.
And it sounds reasonable enough. If the lenders pay brokers a commission on the loan, wouldn’t they pass that cost down to the consumer in the form of a fee?
Not in Australia.
In fact, only lenders pay mortgage brokers commission upfront to arrange a loan. Afterward, they pay a trailing commission for looking after you throughout the life of the loan.
Due to new legislation, mortgage brokers are required to make lender and product recommendations based on the specific requirements and financial circumstances of their customers.
In other words, a mortgage broker won’t leave you broke.
2. Do Banks/Lenders Prefer to Avoid Mortgage Brokers?
A lot of people think that if they use a broker, it’ll put them at a disadvantage with their lender.
That’s not true.
In fact with a good broker, you can actually improve your standing with your bank. That’s because your broker handles all the necessary documents on their own to make sure they’re completed correctly and ahead of time.
Lenders, on the other hand, choose to lend to different people at different times. If you go to the bank and get declined for a loan, it’s most likely because of their lending policies – not you.
What a reputable mortgage broker does in this situation is minimize your overall risk by finding the right lender for you from the beginning.
In 2015, more than 52 percent of mortgages written go through a mortgage broker – a number that may soon increase.
3. Are Mortgage Brokers Biased Towards Their Favorite Lenders?
Here’s another misconception I see all too often.
Buyers think that if they go with a broker, they’ll only be able to receive a loan from the broker’s preferred lender.
The idea behind this misconception is simple enough: brokers receive different commission rates from different lenders. As a result, they should always go with the lender who offers them the highest rates.
But the truth is, mortgage brokers want to work with their clients to find the best possible product for their needs.
Think about it this way. Reputation is everything to a broker. That means they don’t just consider the differences in commission – they think about what’s best for their client.
So, mortgage brokers are often the best tool at your disposal for finding the right home loan for you and your family.
Do you have any questions about working with a mortgage broker? Share in the comments below, and I’ll do my best to help!