Why use a mortgage broker ?

Why use a mortgage broker ?

I have never used one in the pass 20 yrs.

Thinking of getting one for SMSF loan.

Can they get a lower interest rate for you, rather then what the bank is advertising.

Can they really make the process easier.

Grace

Hi Grace,

You may be better of speaking to the banks themselves as mortgage brokers don't know the intricacies of the different loan products, banks can have more than 20 different loan products and most mortgage brokers use between 20 to 30 lenders, they don't know the intracacies of all 400 to 600 products.

Cheers,

Dan

PS Before making a decision speak to your lending specialist as this is general information and does not take into account your situation.

Mortgage brokers have a panel of lenders they have access to, and with a thorough understanding of the servicability models of each lender and of the details of each product - they should be able to quickly and easily find the most appropriate loan product for you.

You won't always get a lower interest rate, and indeed, the lowest interest rate is not necessarily the best product for your circumstances.

A mortgage broker should make the whole process easier and give you more flexibility with your borrowing.

... that being said, if you are quite happy doing the research yourself and doing all the paperwork and dealing directly with the lender, there's no reason you can't do it yourself.

I have a great mortgage broker who has done something like a dozen loans for me so far.

I wouldn't deal with a broker who doesn't have a good understanding of the products they deal with - that's their job.

I would much rather deal with a broker who can identify great products amongst the many on offer from their panel of lenders than try and find the right product myself.

Could you recommend a mortgage broker Sim? do you use someone individually, or someone like mortgage choice, etc..?

I have no recommendations for Newcastle.

I use Rolf Latham from ASAP Financial Services ... he used to be in Sydney but now lives on the Gold Coast.

I would generally tend to go with a small independent firm rather than a big chain - but it's the people who make the difference, not the company.

Note taken Sim, thanks!

Grace,
Part of my role is a mortgage broker so take what I say with a grain of salt.

I would use a professional because they know more than I do and will save me time and hassle. I would do the research to make sure they were a professional, they knew the products/services/etc that I required and have experience in them. They can provide referees, client testimonials etc and they walk the talk.

The benefit of a good MB is that they can compare different lender products and I agree with Dan, most brokers do not know the individual products as well as a bank staff member does but it is not about knowing detail, it is about finding the right options for your needs. Most MB's would only use 2 to 5 lenders with the majority of business going to 1 or 2 lenders. However 2 lenders is doubling the choice of just going into one bank branch.

A SMSF loan is new to the market (around 3 years) and most mortgage brokers will not have any knowledge or experience of these. Most branch staff will not know these either and often the lending staff have little idea. For this loan type, the lenders have little on their websites so good luck researching.

I would find a professional who can make sure a SMSF loan is the right way to go for you and understand the limitations and costs. You then need to decide which is the better borrowing vehicle, the SMSF itself borrowing directly from the lender or you as an intermediary. I have one client who had a LOC facility on his PPOR far more than he needed, it made sense for him to lend to his SMSF (at arms length) directly and he did not have the hassle of the 70% LVR, corporate trustee requirements etc to worry about. That is what a professional should be able to offer, advice to what suits your needs.

Sometimes a MB can obtain a better rate than you can as they now the discount structures out there and know which lenders are seeking business. Often you can get the same rate but it is surprising how many borrowers just pay standard variable rates irrespective of the loan amount. Banks are there to make money for their shareholders so they will not always 'offer' you discounts unless you ask.

Good luck
Greg

Totally agree:

1. You need a good adviser
2. Using member financing to loan to your SMSF is so much less hassle than the SMSF borrowing directly from the bank.


In regards to using a broker, I used a good mortgage broker for my property purchase as a first home buyer and he did everything GregR said he should.

As a result was able to buy a mortagee in possession property at about $50k below market value and I am now sitting on ever more juicy equity. I don't think I could have made this happen without the help of a good broker.

Would I use one again now? Probably not - I still believe in the value of the services they offer, but in recent years I have learned a lot and I reckon I could do the job myself (well enough for my needs).

Also I am lucky that I have developed a fantastic relationship with a bank manager who I have referred a lot of business to - meaning I have a little bit of leverage to be able to get what I want. This person has also done numerous SMSF loans ranging in value from a few hundred thousand to a few million.

For the average person / investor having the number of a great mortgage broker in your phone should be essential.

All the best
SM

Agreed. That might sound slightly counter-intuitive, but it's spot on. It's really no different from any other commercial decision like where to buy your groceries or get your car serviced. Some people will prefer the big supermarkets or dealerships, whilst others may find the smaller places may give them better personal service, or be more flexible, or whatever.

As Sim said, it's not always just about rates - there can be other aspects of the structure to consider. It's possible that a that a good broker can sort out an arrangement that is better tailored to the borrower's needs than a regular bank 'product'. Or perhaps not - it's just another possibility that may be worth checking out.


There is also the other side of the coin - you may wish to use a mortgage broker to actually lend money rather than borrow. Banks and other institutions aren't the only source of funds, private individuals can also be involved through a broker. If you have enough cash, the broker might set up a deal whereby you are the major or even sole lender in a particular loan. The alternative is to have a percentage of a pool of funds that the broker has put together by bundling smaller amounts. A friend of mine is the sole lender in one such deal and when the borrower wanted to restructure the loan to suit the needs of his business they were able to agree new terms pretty much directly, with the broker sorting out the nuts and bolts. That may or may not have been better than dealing with a large institution, but in that case it seemed to suit all parties well. But it's very much a case by case thing. Depending on what you need, it might be worth checking out.

Chris