Why Use A Mortgage Broker?
Over the last 20 years, the awareness of mortgage brokers and what they do has dramatically increased. Most people in Geelong have a fair idea of what we do and many people taking out a mortgage will do so through a broker. Despite this I’m sometimes asked, “Why use a mortgage broker?”
We provide a snapshot of the market
As a mortgage broker, I have access to a panel of over 25 lenders. This includes the four major banks, ANZ, CBA, NAB and Westpac. However, it also includes second tier lenders, such as ING, Macquarie, Bank of Melbourne, Citibank. This means that I can pull up several lenders side by side, so that clients can readily and easily compare interest rates and fees as well as different loan products, such as fixed versus variable interest rates. Being able to compare different lenders and different loans side by side clarifies exactly what the client is being offered and promotes a lot of healthy competition, with the client being the ultimate winner.
In contrast if the same client was to walk into a branch, the mortgage specialist within the branch will only be able to show the client their products. The client loses the ability to compare succinctly different lenders and their loan products.
One of the toughest areas as a mortgage broker is keeping up to date with changing credit policies. Different lenders have different credit policies and these policies will change over time. For example, some lenders will accept 100% of over time, other lenders will shade it to only accept 80% of overtime. If the client has limited income, or works significant overtime, this can be the difference between an approval or a decline. It can be that black or white. Knowing which lenders accept 100% of overtime and therefore where to place the client, is an important part of being a mortgage broker. Again, it is the range of choice offered by mortgage brokers which is significant and of value to the client.
As a mortgage broker I am actively involved in professional development to ensure that I keep my knowledge of credit policy relevant. I see it as being of vital important to my business, so that I can best help my clients with their home loan approval.
This is a big one for me. Over the years I have banked with three out of the four major lenders. Over the last 12 months I have had to change my banking details and banking operation in a couple of different areas. Each time I had to go into the local branch to organise the change. I ended up in tears of frustration one time, and in the next instance I went back three times before the change was correctly made. Because I talk to my customers, I know that I am not alone in this type of experience. (One of my greatest surprises as a mortgage broker was when a big burly tradie came into my office and sat down and confessed that one of the four major banks had also had him in tears.)
As a business owner, I’m immediately accountable to my clients. I’m the one which answers the phone, I’m the one in the office every day and ultimately, I’m the one who submits the loan application. I don’t get to hide behind the bureaucracy of a large organisation. I first and foremost represent my business, and this means having to be responsive to my clients in a way that banks and on-line lenders aren’t.
I recently had clients who went back to the existing lender for a small $30,000 top up for non-structural renovations. The lender was a second tier lender which has recently begun encouraging clients to apply directly to them. This existing clients were declined for the top up. What was worse, the call centre which was their contact point was unable to give them a specific reason for the decline, other than, “Your application doesn’t meet our credit policy”!
My clients then called me. I ran through their situation and saw no reason for the decline. There was enough income to service the loan, significant equity in their house and good conduct on their mortgage. However, as I didn’t submit the application for the top up the lender couldn’t discuss the application with me for privacy reasons. The end result was that I refinanced the client to another lender (their loan was approved) and ultimately they had a lower interest rate. Whilst they eventually had a good outcome, they were left frustrated and angry at their initial lender and the lack of transparency.
No cost to the client
Often I’m asked by my clients how I get paid. The answer is that the lender pays me a commission when the loan settles. What this effectively means is that I work for my clients, however, someone else (the lender) is paying the bill. The benefit for my clients, is that they are able to take advantage of my professional knowledge (accumulated over 10 years), my accountability and my personal approach to customer service, at no cost to them. I work for my client and ultimately if I can’t get their loan approved, I don’t get paid. This ensures that a good broker will push back against a poor credit decision as accountability lies with them.
Why wouldn’t you use a broker?
When someone asks me “Why would you use a mortgage broker?” I always think to myself “Why wouldn’t you use a mortgage broker?” My knowledge of the credit market place, my access to a range of lenders, and the resulting competition mortgage brokers bring to the home loan market place, all at no cost to the client, are some really great reasons to use a broker.