How to Work with Mortgage Brokers

In Australia, mortgage brokers are the ones who provide alternatives for borrowers when the bank is not the best option. Brokers have a considerable responsibility to their customers or clients when it comes to providing the best services in getting them the right loan based on their credit score, income level, and a myriad of other factors.

Who are Mortgage Brokers?

Basically, they are the in-between when it comes to borrowers and bankers or lender. They are licenced for their duties and paid professionals that help people find the right home loan for their particular needs. This means a loan that balances between getting the home they desire and having it fit within their budget.
A broker accomplishes this task through leveraging their knowledge of the industry, the networks they have created, and the resources they can count on to help their clients secure the mortgage that is needed. Their job is to research, negotiate, and ultimately find the right lender that best fits their client’s needs and budget. This helps to make the entire process of lending smoother and more manageable for the borrower.

How Do Mortgage Brokers Work?

There are a number of different jobs that mortgage brokers do in order to find the best lenders and loans for their clients.
Assessment: The first step is assessing the financial situation of their clients so they know just how much they can comfortably borrow. In addition, this will help in getting the right product that will best suit the long-term goals of the mortgage itself. The broker will need accurate information in order to make this type of assessment and as a result will provide several different packages.

The client can then choose from the different offers so they can get the one that works the best.
Negotiation & Support: Once you have chosen the lending package that is right for you, the next step for the broker will be to negotiate with the lender in order to get the best deal possible. This will include getting the best rates and additional features that will help ease the burden of the loan itself.
At this point, the broker will provide you with support in the form of answering your questions and making sure that the negotiation process goes as much in your favour as possible. This will include making sure that all the paperwork is filled out correctly and submitted in the proper order.

Mortgage Brokers Commissions

Of course, you may wonder just how mortgage brokers get paid for the work that they do. There are two basic methods of payment, upfront and trailing commissions.
Upfront: This is the most common form of commission paid to a broker which generally constitutes from .3 to .5% of the value of the loan itself. So, a $100,000 mortgage loan with a .5% commission translate to $5,000 for the mortgage broker.
Trailing: This is less popular, but still used in the industry. This is calculated on the remaining loan amount each year that will be paid to the broker. A trailing commission is generally .1 to .2% of the outstanding value of the property.

How the Process Works for You?

When it comes to working with mortgage brokers, the more you understand what they do, the better you can work with them so you can purchase the home you want. Essentially, a broker is like a paid negotiator when it comes to getting the best loan that you can from prominent lenders. While going it alone means not having to pay their commission, you might not be able to swing a deal like a good mortgage broker and wind up having to pay more over the long run.
Provide All Relevant Information: When you find the right mortgage broker, you will need to provide them with all the right information which includes the following;
-    Income
-    Assets
-    Employment & Credit History
-    Any Liabilities

The last one is very important because you don’t want the broker to go into a negotiation only to find out that you have been holding back this information.

Listen to their Recommendations: The broker will assess the information you provide and determine the best type of loan and features that fit your situation. There may be other information such as the right loan amount, what product type works best for you, and the loan-to-value ratio.
You will need to listen to and absorb the information because sometimes you may not like what you hear at first. Remember, mortgage brokers have years of experience and they use that knowledge to find the right loan to fit their client’s needs because it is in their financial interest to do so.

Alternative Options: It is recommended that you have a deposit of at least 20% of the total loan value. If you do not have that amount, the broker can recommend alternatives such as using assets from other properties or perhaps going for a guarantor loan. During this time, you will need to go over options such as any charges, fees, stamp duty, and the like to ensure that you get the best loan possible.

Once the broker has everything needed, a review will take place and then the negotiations will begin. Mortgage brokers are trained to negotiate on your behalf so that you can get the best deal possible. Once an agreement is reached, you will need to sign up for pre-approval and the paperwork will need to be submitted. At this point, the loan is finalised and there will be a Letter of Offer that you will sign. Once the settlement date is reached, you will have the loan needed to secure the home.
However, this does not end the services of mortgage brokers who will still provide you with support by answering questions and staying in touch so that everything goes smoothly. This can be of great help when getting your first home loan and you will also get peace of mind thanks to the presence of the right mortgage broker.

 

If you are looking to enlist the services of a Mortgage Broker, choose one of the reputable professionals from our Mortgage Brokers Directory