Broking a better deal on your home loan

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Dozens of lenders, hundreds of loans, and an overwhelming selection of rates. A mortgage broker can cut through the clutter to help you find the best home loan deal.

It wasn’t so long ago that applying for a home loan meant going cap in hand to the local bank manager. Things are very different today.

Borrowers can choose from big banks, small banks, lenders that only operate online, credit unions, building societies and non-bank lenders. The choice is seemingly endless, and made more confusing by the fact that each lender offers a broad variety of loans.

A competitive, complicated and ever-changing market

Greater choice should be good for consumers. The trouble is, since the global downturn lending criteria has become more stringent, application forms have become more complicated and lenders are continually readjusting their lending limits.

Rather than making life easier for borrowers, today’s smorgasbord of loans has, in many ways, made it more time consuming to pinpoint the ideal lender and loan.

Brokers save time and money

A home loan is often your largest single debt, so it’s essential to secure the loan that’s right for your individual needs and circumstances. A simple solution to help cut through the clutter is to enlist the help of a professional mortgage broker.

A mortgage broker does the legwork for you, sifting through a wide selection of lenders, saving you time and streamlining the loan application process. Given these benefits, it’s not surprising that around 40% of all new loans in Australia are arranged through mortgage brokers.

It’s definitely worth looking more closely to see why brokers are so popular amongst today’s borrowers.

To begin with, brokers work in the mortgage industry, therefore they have up to date knowledge on how different home loans work. They can give you a clear explanation of the types of loans available, and find the loan structure best suited to your individual needs and circumstances. It’s the sort of guidance that can help borrowers avoid costly mistakes.

Your broker will also give you a clear idea of your borrowing capacity – an essential aspect when it comes to buying a home or investment property.

Online calculators can provide a rough guide of your borrowing capacity but only a broker can give you an accurate assessment based on your personal situation.

Going the extra mile

The personal contact that a broker has with the lenders on their panel can help get your application across the line. Your broker is able to give the lenders a face-to-face explanation of why you should receive loan approval – something that’s far harder for borrowers to achieve when they go it alone. This is especially useful for self-employed applicants and first home buyers, who are typically subject to greater lender scrutiny.

This level of lender contact also allows brokers to tap into benefits that may not be available to the broader public. Your broker may even be able to negotiate a money-saving rate discount or a reduction in loan fees and charges. This puts money back in your pocket, with the added sweetener that most brokers don’t charge customers for their service.

Streamlining applications

There are strict responsible lending rules that govern today’s mortgage market, which have seen loan applications become increasingly onerous, often involving significant amounts of paperwork. A broker offers useful support here, providing assistance to accurately complete the application, and then tracking the progress of your loan from approval to settlement.

A good broker can also submit the paperwork needed to secure government grants including the First Home Owner Grant, as well as any stamp duty concessions.

Even after your loan is settled, most brokers will stay in touch as part of their commitment to a long term relationship. Life is constantly changing and it is highly likely that your home loan needs will change along with it. An ongoing relationship with your broker gives you the opportunity to have your home loan regularly reviewed to ensure it continues to be the most suitable and cost-effective choice.

Choose a skilled broker

With plenty of brokers to choose from, it’s worth dealing with a broker approved by the Mortgage and Finance Association of Australia (MFAA). The MFAA is a national body that provides service and representation to professional credit advisers, including mortgage brokers, to assist them to develop, foster and promote the mortgage and finance industry in Australia.

According to Phil Naylor, MFAA CEO, “Our brokers are also backed by industry education and an accreditation process, so you know you’re getting expert guidance.” For more details, visit www.mfaa.com.au.

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Jeff Suter

Managing Director at Dark Horse Financial
Jeff is a long term property investor and provides clients with both residential and commercial finance strategy for a living.

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