With rumours circulating that the banks will be raising interest rates under the cover of the festive season, it’s got us thinking about mortgages and the steps you need to take to ensure you’ve got the right one for you.
Having finance approval in place is a no brainer when it comes to starting any property search.
We get to hear lots of understandable reasons here at Gold Coast Property Advisors as to why people don’t use mortgage brokers – unfortunately, their reasons are often generated by very bad experiences their family or friends have had.
Sometimes choosing the right funding for your next address can be just as difficult as the address itself and it all comes down to one thing – making informed choices.
As independent advisors it’s never our intention to push you to use a mortgage broker over a bank. Only you can decide who the best person is to help you with your finance, but seeing as we’re big advocates for making informed decisions we thought we’d share the top 5 reasons we often come across for not using a mortgage broker.
01 .: The Unknown
“I have no idea how to even choose a good mortgage broker”
Finding any good professional can be a challenge but rest assured their are plenty of independent mortgage brokers out there getting great results for their clients. Ask your friends and colleagues if they know someone who has had a good experience with their broker, ask your accountant or local property advisor.
In our business, we work with mortgage brokers and bankers all over the coast on a daily basis so we know which ones are diligent, successful and professional, and which ones are not and we’d be happy to point you in the right direction.
Getting advice from a mortgage broker is a big deal so I’d want to meet with them in person and make sure it felt like a good fit before handing over any confidential information. Don’t be afraid to interview a few brokers and see what they come back with, especially if it’s your first time using one.
Apart from the mandatory accreditations that a mortgage broker is required to have (registered with ASIC and hold an Australian Credit License (ACL)) and have some type of formal financial services qualification.
Some questions I’d be asking include:
Do you invest in property yourself? Who is your mortgage with and why? Is it fixed or variable?
How long have you been in the industry? How is business going?
Are you a member of any industry body?
How many lenders do you have access to and who do you use the most?
Then of course I’d be asking all of the service-specific questions:
How does your service work?
Is there a direct fee for your service or is it covered by the bank?
What do you think the right loan structure would be for us?
What timeframes do you work within?
02 .: Won’t listen
“They’ll just push me towards whichever bank is paying them the most at the time”
When you’re getting any form of advice always question how independent the source is.
The majority of mortgage brokers in the financial space are equally remunerated by the banks and they have to fully disclose to you what their piece of the pie is anyway.
If you feel like your mortgage broker is pushing you towards which ever bank is paying them the most, perhaps that mortgage broker is not the right fit for you.
03 .: Time (or lack of it)
“I don’t have time to meet with a mortgage broker, I can just apply online through my bank.”
Applying online through my bank is essentially the same as what a mortgage broker does anyway, right? Wrong.
By heading straight to your bank you’re missing out on your biggest advantage – choice. Using a professional to guide and assist you will actually save you time and money in the long run. It will give you access to 50 + loan products on the market instead of just a handful from one bank.
With more choice comes better bargaining power, interest rates and terms which is important in current times when the banks are saying ‘no’ more. Find a professional who has demonstrated experience in adding value in this way.
Working with a mortgage broker you’ll enjoy exposure to far more of the industry than you can access alone. And you’ll be rewarded with the benefits of having one person (brokers often own their own business so they’re invested in you for the long haul) committed to seeing your loan right through to settlement.
Banks are big companies after all and will often reward good performing employees with promotions away from their customers, so you’re helpful contact at the bank might not be there when you need to call on them next.
04 .: Value
“They won’t listen and will only structure our funding the way they want.”
There are some incredibly egotistical and arrogant mortgage brokers out there, who won’t listen to you. There’s bankers, financial planners and insurance brokers who are like this too.
And there are mortgage brokers, and other professionals, who are awesome at interpreting a client’s brief and coming up with a unique solution for their financial goals that, while it may not be what they asked for, totally exceeds their needs and expectations.
What’s key is that you find the right professional for you:
How well do they communicate;
Do they have a reputation for working well with not only their clients but other parties involved in a property transaction like lawyers, accountants and buyers agents;
Are they mobile;
Do they share similar values and see the world in the same way you do;
What types of loans do they specialise in (investment, SMSF, commercial etc – all require some different level of skill set) and;
Do they work with every bank.
And that you then:
Provide clear instructions around what you’re seeking to achieve, and are direct about needs, wants, budget and timing;
Trust that your professional can use their expertise to help you achieve your goals; and
Have honest conversations about when you feel you’re being railroaded or not listened to.
We’re in small business so it’s also important to us that we work with a broker that to some degree understands our business structure. And can also work in nicely with our accountant to access documents (like a report from our tax portals if required)
05 .: Questionable Advice
“They’ll want me to buy an investment property through them or see their financial planner first.”
Let’s be straight here – for starters, if this is where the conversation is at, you’re not talking to an independent mortgage broker. You’ve either just left a flashy investment or financial planning seminar armed with a spate of too-good-to-be-true investment scenarios…
Or, your mortgage broker is the birth child of a financial planning firm that flogs developer stock as good investments (they’re also known as property spruikers, wealth creation experts or full service financial planning firms) and because the property industry is unregulated when it comes to investment advice the Gold Coast is rife with them.
While we’re on the subject of questionable advice, remember also through this process that unless your mortgage broker is purchasing property on a daily basis they’re only qualified to give you advice on the best loans for your circumstances.
We here all to often a mortgage broker offering their own good intentioned but ill informed ‘advice’ on where to invest and what to buy. But unfortunately they can’t give you advice on what type of property to buy, the location it should be in and the price you should pay for it, they’re not legally allowed to and they’re not qualified to.
Have you chosen to not use a mortgage broker for your finance? What were your reasons? We’d love to hear why. And if you know of someone this information could help, please share with them.
Want to know about how we can help? Get yourself a copy of our complete guide to working with a Buyers Agent: The Buyers Advantage…