Mortgage brokers function as middlemen between borrowers and different lenders. In other words, a broker works by filing a loan application on your behalf.
Additionally, a broker can help you find a lower interest rate by negotiating with many lenders.
While there are many pros and cons when you work with a broker, you don’t necessarily have to work with one. In fact, here are the top five reasons not to use a mortgage broker, especially if you’re buying a home in Australia.
It’s Hard to Find a Good Broker.
You can liken the process of finding a good brokering expert to searching for a capable doctor. You need to do extensive online and real-life research to get someone who could help you with a home loan.
So, if you want to get your hands on the best professionals, you should ask your family or friends for advice or recommendations. As they have actual experience in dealing with the person, they know if they can provide the service you need.
You shouldn’t take this at face value, though. You should meet ASAP with the mortgage broker. Ask questions like:
- Do you have the necessary registration and license? (Tip: Your broker should be registered with ASIC and have an Australian Credit License.)
- How long have you been in the business?
- Are you a member of any mortgage brokering association?
- How many credit provider or lender companies do you have access to? What do you use most?
- Do I have to pay ongoing fees for your service? Or will the banks shoulder this?
- What do you think is the best loan structure for my needs?
- How fast can you get the job done?
You Don’t Have Time to Deal With a Mortgage Broker.
If you’re busy at home or work, you probably don’t have time to meet with a broker. After all, you need to coordinate with him frequently, especially if you’re in a hurry to refinance your property.
That said, this lack of free time is one reason you shouldn’t be using a mortgage broker.
For one, you can apply for home loans by yourself. You can even go and make a direct inquiry to banks. You can also file for one online.
While this will give you a lot of free time on your hands, you’ll probably miss out on some things.
A mortgage broker can assist you in comparing various home loan options. And when you know the different services available, you’re in a better place to get competitive interest rates.
Some Mortgage Brokers are Pushy.
Most mortgage brokers are paid by banks. That said, yours might push you to settle with this bank or this loan amount, even if you’re not convinced about it.
Should this be the case, you need to ask the broker about the money he receives. Legally, mortgage brokers are obliged to disclose the fees they get paid with.
If you think he’s leaning towards one bank because of this commission, you’ll probably get a better deal by dealing with it yourself.
Some Brokers Just Don’t Listen to Clients.
Like any other Australian financial professional, your mortgage broker might be egotistic. So yes, it could be hard to work with both a home loan and an egotistic advisor.
That said, not all brokers are alike. What you should do is cut this one off and find an independent broker instead. After all, many of them can cater to your needs.
Should you decide to look for another finance expert, make sure to work with a person who:
- Works with various lenders
- Has a good reputation with credit institutions, lawyers, and accountants alike
- Shares your values
- Is easily mobile
- Is a good communicator
- Specialises in the loan product you need
Brokers Tend to Give Some Questionable Financial Advice.
Is your broker bugging you to take a dubious home loan when the other offers a better interest rate? Chances are you’re dealing with a person employed with a financial planning firm.
You’ll know this for sure if he promotes this or that stock as a good deal.
According to the Australian Credit bylaws, these professionals should not advise you on what property or location to purchase. More importantly, he shouldn’t dictate the cost or fee that you need to pay.
To avoid such unscrupulous transactions, you should ditch your mortgage broker in favour of independent finance professionals.
Make sure to go with one who takes loans regularly. With this vast experience, he’s more suited to give you advice on loans and whatnot.
Without a doubt, a broker’s experience and skills can help you with home loans and other related services. But in most cases, you’re better off with independent professionals. With their help, you can easily compare bank lenders and get the lowest fixed rate possible.