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Should I Use a Mortgage Broker?

Sure, you could approach a bank yourself, but working with an adviser gives you a better chance of getting a yes (and it’s free), says Peter Norris of Catalyst Financial.

24 August 2022

First of all, these days they’re mortgage ‘advisers’, but for the purpose of the article, let’s run with brokers.

Right now, mortgage brokers account for close to 40 per cent of all new mortgage business settled in New Zealand.

In Australia, that number is closer to 65 per cent, and in the UK it’s up over 90 per cent.

That percentage in New Zealand is growing as more and more borrowers look to the experts for help getting a mortgage.

What they do

But what does a mortgage broker do, and should you use one?

Fundamentally, using a mortgage broker should simplify the borrowing process for you. But it’s more than that. And it’s more than simply getting the best interest rate.

In fact, I’ll often say to clients that bank pricing is close to last on my list of priorities when I’m helping them get a loan.

The main reason for this is that banks are all largely offering the same rates and cash and, in almost all cases, it’s the advertised special which the client could get themselves.

If you’re broker’s point of difference is based on price, question it.

A mortgage broker acts as the middle person between you and the bank. They’re your representative.

They’re the person who’s going to take all your documents (like your pay slips and bank statements) and present your mortgage application in the best possible light to give you the greatest chance of getting a loan.

That last bit is key. A good mortgage broker will be the difference between how much you can borrow, and whether or not you can borrow at all.

What you don’t know

Could you deal direct with a bank? Sure, of course you can. The problem is you don’t know what you don’t know.

A great banker is still working for whatever bank pays their bills. They’re constrained by their bank’s policy and have to work within that.

A mortgage broker has the ability to look at your application and assess which lender will best fit your needs in the short and long term, and across all lenders.

This gives you access to a wider range of options and, ultimately, a much higher chance of getting a yes.

Which structure?

Structuring your mortgage is the next important part a broker will help you with.

They’ll advise you (a banker can’t advise) and help you make decisions on how to structure your mortgage is a way that suits your short and long-term plans.

They’ll take into account these factors:

  • How long to fix your loan for? And why?
  • Should you put some on floating or revolving credit?
  • What structure makes sure you pay your loan off faster?
  • Whether you should use an interest-only mortgage.
  • Should you split across multiple lenders?
  • Do you have future plans, such as investment property, that need to be factored in.

I can’t believe this doesn’t cost!

All of this should be reason enough to use a mortgage broker. A good mortgage broker should give you an experience that you’d be happy to pay for.

But the beauty of it is that in almost all cases, you don’t have to pay for it.

A broker gets paid a commission by the banks once your loan settles and, because of that, it doesn’t cost you anything.

It’s also becoming more common for mortgage brokers to be in salaried jobs, which means they’re not incentivised to go with any particular bank.

This takes away any bias and ensures you get the best independent advice.

Get a good one

So, is it worth using a mortgage broker? Hell, yes, provided, of course, you have a good one.

There are very few ‘no-brainers’ in buying property … but for us, using a mortgage broker is one of them.

We’re in a rising rate market with rapidly changing lending rules. Navigating that without an expert could be as costly as building your own house with no building experience.

You simply wouldn’t even think about doing that, let alone actually do it.

A good mortgage broker is an experienced hand guiding you to where you want to go financially.

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