Mortgage brokers offer by far the most useful service for those new to the market. It may come as a surprise that they’ve outstripped real estate agents, buyers advocates and conveyancers because it’s difficult to understand the value of an excellent mortgage broker until you’ve used one.
To that end, what does a mortgage broker really offer? How can they save you time and money when you’re buying your first home?
When you walk into your local bank branch, they might offer your one or two different loans. They’ll most likely be standard, off-the-shelf products and you won’t get much choice when it comes to the interest rate that you’ll have to pay.
On the other hand, if you enlist the services of a mortgage broker they’ll search through hundreds, maybe thousands of home loan products to find you a competitive rate.
Finder data shows that they average rate for a variable home loan is 5 per cent right now. With any luck your mortgage broker could find you a better deal, saving you thousands over the life of your loan.
Mortgage brokers are finance experts, and most have advised countless customers on their home loans. Because of that expert insider knowledge, and hands-on experience your broker will be able to tailor a loan to suit your lifestyle, your budget and your goals.
That means your repayments will be easily affordable, and every feature of your loan will be purposed to make your life as easy as possible.
Your mortgage broker won’t just tailor the length of your loan and your repayments to you – they’ll also customise the way your loan works by adding helpful extra features. These may include a redraw facility, which allows you to withdraw or deposit extra funds into your home loan when it suits, allowing you more flexibility.
You could also add on an offset account. This feature allows you to link a savings account to your home loan, reducing the portion of your home loan that you pay interest on by the amount in your savings account. For example, if you have a $400,000 principal and $100,000 in your savings account, you’ll only pay interest on $300,000 – which could make a big difference.
Securing and managing a home loan takes time, particularly if you want to go out of your way to get the most suitable finance possible. A mortgage broker will manage the entire process for you, from choosing a loan, to approval and all the way to the day you finally settle.
The value of this is not to be underestimated. You’ll save yourself several days of hassle and stress if you let your broker do the legwork for you, and professional advice will always be a call away if you have any issues.
As of January this year, first home buyers made up a record low 7.1 per cent of housing finance commitments, while investors made up 39 per cent, CoreLogic RP Data research shows. The fact is, banks may assess that first home buyers present a larger risk and limit their lending to those with smaller deposits, less resources or no history of paying back loans.
This obviously makes it difficult to get a loan approved – unless you have a mortgage broker on your side. The best brokers have relationships with the lenders that they deal with, as well as inside information on how they decide whether or not to approve a loan. They’ll use these relationships and inside knowledge to negotiate on your behalf, increasing the chances that your loan is approved.
When you’re approved for a home loan you may be surprised by the amount of extra fees you have to pay. These could include: discharge fees, early exit fees, lender’s mortgage insurance, application fees as well as several other ongoing costs. If these are unexpected they can really throw a spanner in your finances.
Your mortgage broker will both work to minimise fees and ensure that you fully understand when, what and why you have to pay your lender extra charges. That way you won’t be inconvenienced as you can plan ahead for extra costs.
Unless you’re on the rich list, money’s sure to be tight when buying your first home. Make your life easier by saving yourself valuable time and money with the help of a local mortgage broker that you can trust.