Hi everyone
My borrowing situation is probably as simple as it gets.
Already have a 50% deposit to purchase a $500000, 2 bed unit in Brisbane.
Steady full time job
No current debts or loans
Should I engage with a mortgage broker or apply through sites like Athena or tictoc on my own.
Any advice would be appreciated.
First Home Buyer Loan - Mortgage Broker or Go It Alone
David76 on 26/02/2022 - 10:03
Comments
As far as I can tell, the commission a broker gets will get paid to the bank loan arranger, pretty much, so it isn’t like you get the benefit of going direct.
And if you can find a better deal than a broker, go for it.While the lender pays the broker commission, you pay the lender, so your rate is inherently higher to account for the commission. When I bought, I did the legwork and simply shopped between online banks, and their rate was lower than any broker could get me. For simple situations like the OP's, I'd go direct.
"For simple situations like the OP's, I'd go direct."
Unless a broker can get you a better deal, which, according the many brokers who post on these forums, is often.
I asked two brokers, and they couldn't match Ubank's advertised rate at that time; I'm confident it would be the same in 2022. I'd only go to a broker if certain conditions complicate the loan, or I want to borrow more than what the bank is willing to lend upfront. In that case, yes, a good broker can shop around and sell your case to the lender. In the OP's situation, I'd bet my next paycheque, they'd better rate simply by following the home loan deals on Ozbargain.
@SydStrand: Brokers won't be able to match any of the online lenders but I wouldn't dismiss them on that basis. My experience with brokers (on these forums that you've linked offering a better deal) is that the last thing they want is a complicated loan.
@sydstrand it’s not all just about the rate. There is fixed vs variable loans to consider, does it allow offset and redraw or additional payments (if fixes) and then there are the annual or ongoing fees to consider. Another consideration is the purpose of the loan - owner occupied or investment. This could also change the strategy.
Get a good broker - at least they will educate you and then if you decide to go direct you will know what you are looking for
Most of what you've listed (variable vs fixed, additional payments, fees, etc.) are clearly advertised and easily compared. There are even google spreadsheets floating around Whirlpool for comparing these offers, including those offering additional features, e.g. redraw.
I'm not an accountant, but when I was buying my first house, I found the information is out there so long as you're prepared to do a little homework and spend time talking to banks. Yes, a broker handles this for you, but if their rate is inferior, is that convenience worth adding thousands or tens of thousands over years, or the life of the loan? For me, no. Brokers like to keep this process opaque, and pretend it's mathematical wizardry that only they have the skill to navigate. If everyone did a bit of legwork by shopping around and comparing it to what their broker found, they'd be shocked.
@SydStrand: I think you have just spoken with lousy brokers!
Im not saying in every case a broker will get the best rate… but in my case they have always found a better deal overall.
My first loan, the broker found a deal with Citibank that only required 10% deposit (90% LVR) with no requirement for Lenders Mortgage Insurance. The rate was slightly higher but it saved me $15,000 LMI compared to all other banks. The strategy was to wait until the market increased and then refinance to ING which had the best rate at the time.
More recently I refinanced and the broker found a deal with St George fixed for 3 years for 1.84% (compared to Ubank which was 1.89%). St George also gave a $7K rebate for siging up vs $0 from Ubank.
Save yourself a headache and just use a broker.
Have had a great experience using a broker. He has helped us refinance 4 times over the past 10 yrs~ Pm'd
How do people manage to save 250 grand?
People do it by not eating 🥑🥪 and buying new 📱 every year.
Put need before want.
It's doable.
50k, 100k, 250k, 400k… As someone who has saved in excess of one of those figures mentioned, I have to say, everybody's circumstances are different.
Having a stable income is a start.
Who said he saved it? But it’s easily doable for many of us, but not all of us. The two variables are income and time. If you have plenty of one or enough of both (an inheritance helps), and spend wisely, you can get there ‘relatively’ quickly.
Living at home, not eating out, not going out, not having a girlfriend, not owning a car and working two jobs. Can easily save this in three years.
There are some small lenders that brokers don't deal with. If u find those lenders have better rates and give u what u need, then maybe that's the best option for u. (I'm thinking tic toc, Athena…. I don't know for sure which banks don't deal with lenders, I'm just guessing. But there are some)
Otherwise, I'd go broker.
My thoughts too. If you have over 20% deposit then the online lenders give you the best rates.
Very similar situation to you.
I tried on my own and got rejected.
I'm now with a broker.
100% should have done it from the start!This is odd. If you have a 50 per cent deposit, there’s no reason to reject your application unless you don’t have a job, your salary is low or due to age. If it is any of those things, you should say so than give a wrong steer.
I have always gone direct and I’ve never had a problem. It’s not difficult at all.
depending on who it is, maybe their lack of financial experience is seen as a bad thing? Banks and Lenders sometimes want to see not just that you can save money, but that you have/had a loan and are able to pay it off responsibly
On a recommendation or did you find one yourself?
Go Broker. More tools, more options and you can always go back and forth with them. I consider them a partner in crime for your purchase.
If you go lender direct (I've tried before), it's the headache….they delay a lot of responses and it stresses you out and they don't give a shit about you on settlement day. P.S. ANZ are terrible at this.
It sounds like a pretty simple transaction and you should be able to get through it okay yourself if you wanted to. But if you don't want the hassle of going directly , then go to a broker.
Bear in mind that brokers have a wide panel of lenders they can put you with, but often they're not across all of the nuts and bolts of all of those lenders' policies whereas a bank lender will know their own policy and not waste your time if you don't fit. If there's nothing complicated about your situation this may not be an issue though. They may be able to get you a really competitive rate upfront (I know my broker did) but down the track you might find it difficult to negotiate the rate down further, due to trailing commission.
Of course a lot of the online lenders don't accept applications from brokers so you do need to go directly to the lender. They can be pretty easy to deal with, though, with after-hours phone calls etc and uploading docs via their portal. If you're comfortable dealing solely online you'll be fine.
I settled on my first home early last year and went through these pains.
I also ran down lots of options with both a couple of brokers, and a whole bunch of direct lenders.In the end I went with reduceloans and am still pretty happy with the rate, and overall arrangement.
None of the brokers had offers that matched the direct lender rates. The brokers generally offered only from the main bank lenders (i.e. HSBC, ANZ, bank of Melbourne, bank of Queensland, etc). Even if the listed rates looked 'equal' i.e. <2%p.a. if you looked at the actual lifetime cost they were closer to 3% (e.g. Westpac had some stupid monthly account maintenance fee, and you needed to pay some additional yearly premium fee to get the lowest rate).
Dealing direct with lenders is a headache though, and especially in the week or so leading up to settlement was pretty stressful with them being slow on document turn around. Likely if you have a really fixed settlement date and have the lender locked in sooner it wouldn't be a problem however.
You really want to get serious with Excel when you compare lenders so you can look at the real 'comparison rate' as it applies to your loan. The 'interest rate' advertised in big bold lettering is absolutely worthless..
I think you should go direct. You'll almost certainly save money.
With that much equity (50%) you might want to consider long term plans
Get a good broker who will ask the right questions of you and think about how to keep your options open.
E.g. if you think you might rent out the place at some point it would be better from a tax perspective to have a bigger loan. In this case you might only provide the minimum deposit required and keep the rest as savings in the offset account.
A good broker will help you with this kind of strategy or perhaps suggest something different based on your long term goals
This is the answer to your question.
If you are only interested in rate and have no interest in longer term planning then go ahead with a bare bones online lender yourself
The other consideration here is finding a good broker based off research or recommendation, not just anyone. There is a big difference between a good broker and an ordinary one, just like all trades
See what deal a broker can do you, but you'll find a better deal yourself. Brokers don't deal with Athena, Homestar or loans.com.au, so using a broker is limiting your choice, and excluding the best value options IMO.
With that amount going to 2nd tier lender (i.e. athena) is the best thing if you want to get a best rate. However if you haven’t actually paid off your PPR DO NOT USE 50% deposit. You’ll want to make sure you use the least amount of money for an investment property and make sure you paid off your PPR first for the maximising tax benefit.
it doesn’t hurt to at least talk to a broker or two? See what they’re like, what kind of offer and conditions they can give you, then compare it to what you can manage to yourself and weigh up your options.
Brokers are no different to any other industry - some are rubbish and don’t know their arse from their elbow, others are amazing and will use every personal favour owed to get you what you want.
I say go with a broker, but I may be biased as I used to be one.
Most lenders pay brokers at about the same commission rates, unless you are looking at low doc/no doc loans (ie don’t have reliable paperwork to cover repayments).
Ask the broker which lenders he/she operates with for a start. Some “brokers” only work with one lender and its subsidiaries.
Know what features you want. Extra payment annual limits? No of re-draws per year, free split loan, credit card, line of credit, annual account fees, loan set-up fees, deferred set up fees, fixed rate loan early payout fees, early payout penalties. Not to mention any tax costs/benefits if applicable.
If your broker is any good, They will contact you if a different lender offers a better dealGoing through a broker would be a waste of time, based on your situation.
Just apply with Athena or Tic:Toc. Both of these guys have low rates and a super simple application process
Getting negged by people who struggle to fill out a simple form. Bring it on. Most people don't need a broker and they often just add extra work and delays. There is nothing complex about OPs situation.
@Aureus it’s not all just about the rate. How do you know OPs situation?
Read the OP. "My borrowing situation is probably as simple as it gets."
I would assume from that, he isn't doing any debt recycling or anything to do with trusts or investments. Even then a financial advisor/accountant would be better to speak to.
@Aureus: I did read the OP…. if it is so simple why does OP need to ask a public forum as opposed to understanding all the loan options and educating themselves?
Is OP buying an investment or going to be owner occupier? Fixed or Variable loan? If fixed and OPs situation changes can they terminate the loan without penalty or pay additional amounts ahead of the repayment schedule to avoid paying interest?
I dont know any good broker that would reccomend tying up 50% equity in a loan when you could achieve the same by providing the minimum amount and parking the residual funds into an offset account which provides flexibility for the future to use the money for renovations or to buy another property.
@BreezyPalms: All that stuff is basic research. If you are not able to do basic research before doing potentially the biggest purchase of your life, by all means go to a broker. You will end up with a higher interest rate and indirectly paying 10s of thousands for the service.
@Aureus: I disagree - used a broker every time and they got a better deal than UBank, Athena etc offer, for example a year ago
- fixed for 3 years with st george for 1.84% and got $7k rebate from broker. Can repay up to $30k ahead of fixed schedule (which was important for me)
- UBank /Athena were only able to offer 1.89%, no rebate and as far as I know they had no ability to pay ahead of schedule
@BreezyPalms: Just to clarify, it won’t be an investment property and I have absolutely no interest in purchasing another property or doing renovations. On top of the 50% deposit, I intend to have about $20000 in an offset account as a rainy day fund.
@David76: I’d still go talk with a broker - they will be able to tell you their best deals pretty quickly and you then choose what to do.
I used tictoc. Went super smooth and quickly, backed by adelaid bank who were awesome to deal with
How did you go David?
I'm looking at refinancing at the moment and not sure what to do.
If you're confident enough with financial matters have a go yourself.
If unsure or going alone gets too complicated try a broker.
You could even do both and take the best deal out of the two.