Are you thinking about buying a home? Whether it’s your first, second or an investment have you considered using a mortgage broker? We are here to make the process as seamless as possible and find you the best deal suited to your personal circumstances.
We often get asked questions about what we do and how we can help you, so we have put together a list of common FAQ’s to answer some of those burning questions.
What does a mortgage broker do?
There are a range of loan products, options and features in the housing market that can be overwhelming or misunderstood. We can assist you with;
- Assessing your financial situation and calculating your borrowing capacity
- Finding a suitable loan ideal for your circumstances
- Manage the entire application process
- Provide you with advice every step of the way and explain anything you have questions on
How much do mortgage brokers cost?
Generally speaking, mortgage brokers do not charge you a fee for their service. The only time you will could be charged is if you repay the full amount of your loan within the first 24 months of settlement. The lender will normally charge us a fee known as a ‘clawback’ for the loan being paid back faster than calculated which ultimately affects the lenders profit so they need to charge a fee to cover costs. If we are charged this fee, we may then have to on-charge it to you. If you think you can pay it back within the first 24 months let us know prior and we can make arrangements! But hey, if you can repay a home loan in the first 24 months of settlement WOW, go you!
Then how do brokers get paid?
Brokers earn income through commission. We are paid from the banks we introduce your loan to. This comes in the form of an upfront commission and a trail commission.
- An upfront commission will typically be between 0.5% and 0.7% depending on the lender and it is calculated off the introduce loan balance. On a $500k loan this is between $2,500 to $3,500.
- A trail commission will typically be between 0.1% to 0.2% of the current loan balance paid on a monthly basis and reduces in line with the customer paying down their debt.
If the banks pay the broker commission does this impact the interest rate I pay on my loan?
The short answer is no. Most banks recognise that brokers are a cost-effective means of selling their loan products. This compared to opening a store and hiring staff represents a significant cost saving and therefore take on the broker cost and minor reduction in profits.
Why should I use mortgage broker over a bank?
- Choice – one key benefit of mortgage brokers is access to lenders. You might be wondering why this is important. It means that you get choice of products in the market relative to just being offered what’s available by your lender.
- Policy – following on from choice comes access to policy. Each bank has different views on clients lending positions and therefore what is acceptable to one is not always acceptable to another. A broker will save you the hassle and provide acceptable options and help avoid unnecessary declines.
- Ease and simplicity – a brokers job typically involves taking the manual work normally required by the client when dealing with a bank directly and removing this responsibility from their clients hands.
- Relationship management and ongoing support– A lot of brokers are self-employed and rely on their existing clients on an ongoing basis. Gone are the days when you had a relationship with your local bank manager – a mortgage broker can be an extension of this.
- Knowledge and experience – many brokers have been working in the industry for the long term and can use that knowledge to find you suitable solutions.
If you’re in the market for a loan, get in touch with us and we can show you all the benefits of having a good mortgage broker!