Mortgage brokers are financial professionals who work to connect lenders and borrowers. Usually they work with dozens or hundreds of loan companies as independent agents, not as employees.
Mortgage brokers are like scouts. They identify and evaluate home buyers, determining which loan would be best based on each person’s credit situation. The broker submits the home buyer’s application to few lenders for the approval of the loan, and works closely with the lender until it closes. The best mortgage broker can find a lending institution for pretty much any type of credit situation that you have. To find the right mortgage broker in Sydney, ensure you ask the right questions.
One important fact borrowers should realize is that great brokers don’t tend to focus on every market, they tend to stick to a particular niche.
Moreover, the needs of a first-time home buyer may be different compared to the needs of a busy professional.
In order to determine whether your broker is a good one, ask the following questions to your mortgage broker after you have a shortlist of potentially good mortgage brokers.
It’s about finding a broker who is experienced, and dealt with clients in similar situations, e.g. first home buyers, investors, construction work, Australians who live overseas etc.
The mortgage broker who is securing your loan earns commission from the loan transaction and the better the deal they get a lender, the more they get paid. You don’t need to disclose the interest rate you intend to accept to a broker. Let them tell you what terms they can obtain for you. Shop around to make sure you’re getting a fair deal. Most of the mortgage companies advertising online are mortgage brokers.
Mortgage brokers who are new to the industry or have less experience may levy an upfront fee or mandate as a means of obtaining commitment from a client to invest in their project, in case the broker spends time on the customer’s application but never results in a settlement.
They might have encountered a high rate of ‘tyre kickers’ and found that they were spending a lot of time on handling inquiries rather than settling many loans. To meet their operating costs, they charge a fee up front. The fee may either be a percentage of the loan amount or a fixed amount that may or may not be refunded upon settlement.
As a general rule, if a mortgage broker knows how to do his or her job, he or she will be more successful at bringing a loan to settlement and won’t charge a fee.
The same as other service providers like recruitment agencies or real estate agents, most mortgage brokers do not make any money unless they are successful. The mortgage broker receives a payment when the loan is closed from the lender instead of a fee for service. The payment may be an up-front payment as well as a ‘trailing’ payment. Up-front payments are calculated on the entire amount borrowed and are paid once. If the loan is discharged within a shorter period of time, the lender may recall or ‘claw back’ the payment made from the mortgage broker.
Some lenders offer a ‘trail’ feature, which is a payment made every month for the life of the loan; however, this feature isn’t offered on all loan products. Some lenders don’t pay trail at all or they do only if the loan is over a certain amount of money.
Freshwater Financial Services ensures that all Australians have access to competitively priced home loans from a range of lenders. To learn more about how Northern Beaches Freshwater Financial Services can help, contact on 9907 4624
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