Wikipedia defines a Mortgage Broker as “an intermediary who brokers mortgage loans on behalf of individuals or businesses. Mortgage brokers exist to find a bank or a direct lender that an individual seeks with a specific loan the individual is seeking. Mortgage brokers are regulated to ensure compliance with banking and or finance laws in the jurisdiction of the consumer.”
However there is so much more to what a mortgage broker actually does:
- Your Mortgage Broker is a Listener – They will meet with you to discuss your personal situation in detail. They will outline your current financial position (often called a health check) they will discuss your short, medium and long term goals, intentions and reasons for your loan application.
- Your Mortgage Broker is a Researcher – Upon this your mortgage broker will do all the necessary research – with sometimes over 30 lenders to find you some options. They will outline the pros and cons of each lender. They will contact as many lenders as they need to so that they can find you the best option specific to your situation and needs…. Believe me, it really is amazing as to how different every situation is!
- Your Mortgage Broker is a Negotiator – Your mortgage broker may also negotiate your rate with either your current lender or your new lender so that you can get the best rate possible. This can happen on a case by case basis and does depend on your lender, your individual circumstances and loan amount.
- Your Mortgage Broker is an Organiser – Your mortgage broker will arrange to collect all your loan documents and will prepare the loan application to the bank on your behalf. They will upload onto the lender portals, submit the paperwork to them and follow this through right through from the submission to settlement. There are many steps here your broker keeps a track of – receipt of documents, ensuring valuations are ordered and returned in a timely manner, ensuring mortgage insurance will review the file for approval, that documents are printed and sent in time ….and are correct! And when they are returned make sure that all the required documents are there for settlement. The journey does not end here. Your mortgage broker will also be there to help you post settlement; to answer any questions you may have, to discuss and facilitate any changes required to the loan and will also be there to conduct annual reviews.
- Your Mortgage Broker is a Communicator – Your mortgage broker will update with you and any other third parties that you wish to be notified on the loan process. Your mortgage broker will also have very good relationships with their banking and lender contacts so that if there are any problems …and believe me MANY little issues happen behind the scenes that our clients are never aware of … they know who to speak to so that the problem is sorted and dealt with as quickly as possible.
- Your Mortgage Broker is a Time Manager – A mortgage broker can have many files on the go at the same time – it is not uncommon to have at least 15 on the go at once so your mortgage broker has to manage their time very well so that your loan and everyone else’s loan does not get overseen especially if you have a deadline. Your mortgage broker will meet with you at times that suit your busy lifestyle and will fit into your times whenever possible.
It is very important to note that your interest rate is not any higher for this service. Sometimes brokers can actually get better rates than what the major lenders provide.
So how do they get paid?
Mortgage Brokers have historically received commissions from the lender that they have arranged the loan with. There are two types of commissions – an upfront and a trailing commission. An upfront occurs usually one month after the settlement of your home loan and the trailing commission is a smaller commission which is paid monthly for every month that you have maintained your loan (with no late payments).For this reason this is why the Mortgage Broking Industry is seen to be a ‘free’ service. But their remuneration is simply from the lenders direct.
[Disclaimer: Changes may happen to our income in our industry and this may change in the future.]
The service of a Mortgage Broker is invaluable. It saves you time, it reduces your stress and it can even help you find a better rate than what you could possibly find if you tried to source a loan yourself. So if you want to save some money on your mortgage, call a Mortgage Broker today.
Louisa Sanghera is a Finance Broker for Residential Mortgages, Vehicle and Asset Finance, Commercial Lending and Budgetting and Cashflow Coaching. She had over 25 years in the Banking and Finance Industry before deciding to go it alone as a Broker and is the Director of Zippy Finance. Louisa lives in Turramurra, Sydney and is the mum of two children aged 10 and 8 and loves working her business around her family life.