When shopping for a new home loan you can either apply directly to your lender, or you can engage the services of a mortgage broker. But will a broker really be able to help you get that loan?
In some cases, using a mortgage broker can actually make the difference between you being declined or approved for finance.
This is because mortgage brokers spend their days liaising with lenders, learning about their different products and getting to know each lender’s specific loan criteria, borrowing calculators and application systems.
“There is always much more to a home loan than just the advertised rate,” says Linda Clucas, a personal mortgage advisor with Smartline, “and it’s important from the outset to choose a loan that suits your individual situation.”
It’s also important to factor in the relationships that brokers develop with lenders. Through these relationships, they are albe to understand each institution’s individual quirks.
For instance, some banks accept negative gearing figures when calculating an applicant’s serviceability and borrowing power, while other banks don’t. As an everyday property investor you won’t be privy to this information, but a mortgage broker will be able steer you towards a lender that best suits your situation.
There are also so many products and loan features for borrowers to choose from these days, so it helps to have an expert on your side to explain the benefits and drawbacks of each product.
It even pays to use a mortgage broker if you plan to refinance, or when you wish to apply for a home loan through your current bank, Clucas adds.
“One of the most direct impacts of the global credit crisis on Australian homebuyers is that access to finance is now growing more complex,” Clucas explains.
“In this environment of rapid changes, it is more important than ever to do your homework before choosing a home loan, to ensure you are getting the most suitable product for you.”
An experienced mortgage adviser can help by doing this research on your behalf, before walking you through every step of the loan application process. Furthermore, they can suggest some strategies and options that suit your financial situation and goals, both now and in the future.
“This might include going through the pros and cons of a fixed versus a variable rate home loan, or helping you select a home loan that offers maximum flexibility for changing circumstances, or additional features such as offset accounts and mortgage protection insurance,” Clucas says.
At the end of the day, it’s not going to cost you anything to use a broker, making this one of the only points in the property-buying process where you’ll be able to access expert advice without having to pay for it! Your solicitor isn’t going to work for free, and neither is your accountant…
“Our services are free [as] our commission is earned from the lender, and this amount is disclosed to you,” Cluclas says. What have you got to lose?