Discover the Advantages and Disadvantages of Mortgage Brokers
A mortgage is usually the single largest financial commitment anybody will make in their lifetime. It is therefore essential that you seek professional advice and assistance before jumping into such a commitment.
If you are thinking about taking out a home loan, then you might want to consider using a mortgage broker. A mortgage broker can save you time and offer expert advice. However, you need to remember that mortgage brokers make their money from commissions and only offer a limited number of home loan products - the service is not always transparent.
How does a mortgage broker work?
A mortgage broker is very much like an insurance broker in that they will identify your requirements, identify mortgage options that meet your requirements, act as your advocate in negotiations with lenders, and arrange all paperwork necessary to secure the mortgage. Effectively, in a market where you are spoilt for choice, the role of a mortgage broker is to sort through the good, the bad and the ugly and ultimately arrive at a solution that meets your current and future needs.
The advantages of using a mortgage broker
Brokers can match your needs with the lenders and help you decipher the mortgage application process.
Following up the progress of your loan application is time-consuming and frustrating. A good mortgage broker will have a system for chasing up the bank, keeping you informed and saving you time.
2. Make Lenders Compete for You.
By offering their loans through Mortgage Brokers, smaller lenders can promote their loans without having the huge expense of opening branches and hiring their own staff. This reduces their costs and forces all lenders to keep their loans cheap to stay competitive. More competition means cheaper loans for everyone. When you go directly to your bank, you are giving away your power of making lenders compete for you.
The disadvantages of using a mortgage broker
1.You may not be getting the best deal
Many homebuyers simply assume that a broker can deliver a better deal than they could get on their own, but this is not always the case. Some lenders may offer homebuyers the same terms and rates that they offer mortgage brokers (sometimes, even better)
2.Inexperience and no work
A new mortgage broker won't know how to find you the best deal, and there are a few lenders who do not offer loans through mortgage brokers.
3.Not doing their due diligence
Most brokers are comfortable using 3-4 lenders on a regular basis whose policy they are familiar with. So, even though they have over 25 lenders on their panel, they actually don’t use the full range to check suitable options for clients – which means you may miss out on a good deal.
The mortgage market has changed to Digital
The mortgage market has held out longer than most due to the complexity of the product and the number of stakeholders, but it is changing. Re-mortgaging could become commonplace, meaning the most competitive and innovative businesses in the market have much to gain.
We are entering a new, technology-enabled, phase of home buying, one that is going to have to do a far better job for consumers. You may now find that you are using online platforms, such as CrowdfundUP for loans rather than the big banks. The rise of crowdfunding websites are opening the potential for everyone to take part in and profit from financial services, without the need for a big bank.
Oct 10. 2017