Mortgage brokers are not the same as bankers. True, they may have been, but they’ve come into the light since then. Their demonic pasts are over with, and believe it or not, they are on your side. Still, I can’t blame people for being suspicious; the home loans business can get shadier than sunglasses at a midnight Goth concert. In this article, l clarify the confusion about mortgage brokers…and why you should hear them out:
What is a Mortgage Broker?
Mortgage brokers are intermediaries. When you need a home loan, they pop up to mediate between you and the banks. Since lay people understand home loans like Al Qaeda understands democracy, mortgage brokers are essential help guides.
Mortgage brokers ensure their clients get the best possible loans. They find the lowest interest rates, predict problems, and bargain with bankers. Usually while swearing and downing aspirins like tic-tacs. A good mortgage banker should be listened to, because:
- They are not biased toward any bank
- They know better than you ever will
- They speed up your loan approval
- They know where to find the best deal
- It’s Free
1. They Are Not Biased Toward Any Bank
If a banker admits her rates are bad, she’ll be fired faster than a school teacher in a topless photo-shoot. Besides, bankers get a commission from selling home loans; they’re as inclined toward honesty as anorexics are toward Big Macs.
Mortgage brokers, however, don’t work for any bank. They get their money from referral fees: When they point you at a bank and you take the loan, the bank pays them. Because the referral fee is the same regardless of which bank they recommend, mortgage brokers can’t be bothered lying for any of them; it’s faster to just point you at the cheapest rate and collect their fee.
By simple economic principle, it benefits a mortgage broker to be honest with you.
2. They Know Better Than You Ever Will
Home loan packages are complex. If the only thing you understand is “lowest interest rate”, then you’re diving off a waterfall with a $3 kiddy float.
Mortgage brokers keep an eye on small (but important) details; things like lock-in periods, subsidies, and on-margin calls. A 15 minute conversation with a broker can save you 15 years of pain. And why should a mortgage broker know your needs better than you? Mainly, it’s because mortgage brokers have no life.
These people spend all day checking home loan updates, only taking a break to settle divorce papers from their estranged wives. They know more about home loans than any normal human being would ever want to. Reading a few ‘zine articles about loans does not put you on their level, any more than reading about the Sears Tower turns you into an architect.
3. They Speed Up Your Loan Approval
Have you ever handled the paperwork for a home loan? If you’re self-employed, have a foreign spouse, or have an outstanding loan, it gets pretty complicated. There are entire O Level subjects that take less effort.
In fact, the paperwork is so trying, even bankers hate it. Part of the reason they pay mortgage brokers is so that, by the time your paperwork gets to them, everything is in order. So take advantage of it!
When you need to apply for a loan, just shove every document in a folder and chuck it at a broker. For added entertainment, tell them you have no access to a camera; they’ll even march to your door to take photos of your IC. For the working parent or the plain lazy, mortgage brokers are a godsend.
Oh, and because brokers stay up till three in the morning handling this crap, your paperwork will be settled in record time.
4. They Know Where to Find the Best Deal
The home loans market is fast and cyclical. Ever noticed there are few ‘zine articles about “the best home loan ever”? That’s because loan packages change faster than government policies before General Election.
OCBC may be offering the best loan packages this week, but by Monday it may be overtaken by HSBC. Unless you have to up-to-the-minute information, and can process paperwork fast, you won’t get the best deal. And as stated in point 1, don’t count on bankers to be honest with you.
It’s the job of the mortgage broker to track the market, and find you the best bargains. Sometimes, brokers can even get you rates that aren’t available to the public. They have personal contacts in the banking industry, and they can persuade / nag bankers into slightly tweaking their rates.
Some brokers also add their own bonuses to a deal. The mortgage brokers at MoneySmart, for example, give $100 IKEA vouchers to customers depending on your loan amount (while still offering free service).
5. It’s Free
Because mortgage brokers make money from referral fees, they charge you nothing. Not a bad deal, since even community club courses charge something for the advice.
Want to talk to one at no cost, right now? Go to MoneySmart. Just key in your property type and loan amount. In a few minutes, the site’s mortgage brokers can call you to offer advice. You’ll also get to see the best home loan rates from all the local banks.
But don’t charge out and go to the banks yourself! Discuss your situation with the broker first. As I said in point 2, it’s not just about finding the lowest interest rate.
Have you gone through a mortgage broker before? Comment and tell us about it!
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