A mortgage broker plays an intermediary yet vital role in the home loan process. The broker gathers the borrower’s requirements and then works to find a loan to suit the borrower’s needs. There is more to it than this, though. A mortgage broker doesn’t only go loan shopping on a borrower’s behalf. The mortgage broker also works with the borrower to complete all documentation, verify eligibility, work though the entire settlement process and even recommend realtors, inspectors and other professionals involved in the home purchasing process. A realtor doesn’t just look for a good home loan for you; he does all he can to make the entire home buying process as smooth as possible. Experienced mortgage brokers know all the ins and outs of this complex process and will navigate it for you.
In Australia, mortgage brokers don’t work for lending institutions. They work for the borrower and they present the borrower’s needs to banks in order to find the most affordable loan product that suits the home buyer’s needs. A mortgage broker’s experience and connections are what makes him a benefit to a home buyer and such a desirable alternative to shopping for a loan on your own. Using a mortgage broker opens up a world of options that going to a single lender cannot. An added benefit is that using a mortgage broker doesn’t cost anything. In Australia, the broker’s fee is paid by the lender. It’s no wonder that worldwide, brokers are the top sellers of mortgage products for lending institutions.
What Services Can a Mortgage Broker Provide?
First-time home buyers can benefit greatly from using a broker. A mortgage broker can find the best rates and terms possible for borrowers who don’t have a mortgage history or equity. The broker can also help navigate the complex web of incentives, credits and grants to ensure first-timers get all the exemptions and concessions they may be entitled to.
Experienced home buyers will experience many advantages with a broker, too. A mortgage broker can help with the intricate process of buying one home while selling another to make the entire procedure go smoothly.
Brokers aren’t just for buying homes, though. An experienced mortgage broker can help home owners work with lenders to access their equity, refinance their existing mortgage to save money, provide tips on paying off a mortgage quicker and much more. Your mortgage broker is your on-call expert for any home financing related need.
A Look at the Mortgage Brokerage Industry in Australia
The majority of home mortgages sold in Australia today are through mortgage brokers. Brokers play a vital role in helping clients sift through the countless loan options available due to the deregulation of Australia’s finance industry that happened in the 1980s. Before deregulation, restrictive controls made it difficult for banks to compete and hampered consumers’ mortgage choices. With the industry opened, borrowers experienced a sudden increase in their options and many found this new freedom of choice overwhelming. The mortgage brokerage industry filled this niche and now provides a valuable service to consumers across Australia.
The mortgage industry is broken down into four parts: traditional lenders like banks, non-traditional lenders like commercial finance consultants, mortgage brokers and mortgage managers. Mortgage brokers work between borrowers and both types of lenders to find the best loan for their customers.
What are the Steps of a Broker Engagement?
When working with a new client, the first thing the broker does is evaluate the prospective borrower’s finances. They will analyse the customer’s credit report and current income information. Then the broker discusses with the borrower what they can afford and their home needs. From there, the broker assesses the mortgage market to find mortgage products that match the client’s needs.
After evaluating the market for applicable loans, the mortgage broker obtains pre-approval. In this step, lenders agree in principle to the terms of the loan. With pre-approval in places, the client should start looking for a home. Meanwhile, the broker organizes all required documentation with the help of the borrower. This includes the completed loan application, legal documents including disclosures, bank statements, pay stubs and more. Once all information has been gathered and signed, the broker turns it all over to the bank for final approval. During this whole process, a superior mortgage broker will go out of their way to explain every detail to the client and answer any questions they may have. The broker will also stay in constant contact with the lender the resolve any issues and to keep the process moving
During a client engagement, a mortgage broker’s chief responsibility is to the client. Everything the broker does is aimed at saving the client money and obtaining the very best mortgage available for the borrower’s specific financial circumstances. A mortgage broker, with their expansive knowledge of the entire home financing process, will be with the borrower every step of the way, so it’s easy to see why hiring a mortgage broker is better than going it alone.