A good mortgage broker can save you time and money by finding the best deal for your circumstances. People often ask us what we do, and how we can help, so we have put together a list of FAQs to answer some of those burning questions.
What does a mortgage broker do?
We can assist you by:
- Assessing your financial situation and calculating your borrowing capacity
- Finding loan options suited to your circumstances
- Negotiating with the banks to get you the best deal possible
- Managing the application process and taking care of the paperwork
- Providing you with advice every step of the way
How much do mortgage brokers cost?
Mortgage brokers do not normally charge a fee for their services. One exception is if you repay your full loan within the first 24 months of settlement. In this instance, your lender would earn less profit than originally calculated, and they will charge us a ‘clawback’ fee that we may need to charge back to you.
Then how do brokers get paid?
Mortgage brokers earn commissions from banks. This comes in the form of an upfront commission, or a trail commission:
- An upfront commission is typically between 0.5% and 0.7% of the loan balance. For example, on a $500k loan, we would earn commission between $2,500 to $3,500.
- A trail commission is typically between 0.1% to 0.2% of the loan balance. This is paid on a monthly basis and reduces as clients begin to clear their debt.
If the banks pay the broker commission does this impact the interest 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. We provide significant cost savings for banks, which is why they reward us for bringing them your business.
Why should I use a mortgage broker instead of dealing directly with a bank?
- Choice – Good mortgage brokers have access to a variety of lenders. This means you get a choice of products in the market relative to just being offered what’s available at one bank.
- Policy – different lenders have different views on clients' lending position. A broker can negotiate what is acceptable with different lenders to find the best solutions.
- Convenience – a broker's job involves taking on the manual work that is typically involved in the loan application process.
- Ongoing support – A lot of brokers are self-employed and rely on the return business of existing clients. 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 worked in the industry for many years. We can use our expertise to pass on sensible advice and help our clients to avoid unnecessary waiting periods.
If you’re in the market for a home loan, get in touch so we can show you all the benefits of having a good mortgage broker!