Please be gentle, I'm a first home buyer!
1) In your experience, what do mortgage brokers do that online comparison tools can't?
2) Did they try to save you money, or did they try to drive you towards a mortgage that pays them the best commission?
3) Right now, with a 30% deposit, for Live-in variable with offset account, I'm getting a touch under 5.1% on Rate City. Is it worth going through a broker, or am I better going it alone?
I used a broker and it was nice having an agent dealing with the bank for me. They got a decent rate and went to bat for me when there were a few issues. I'll probably be going back to the same one when I refinance next year.
When I was gaining pre-approval my broker asked me if I preferred a particular bank that I wanted to go with or just the cheapest. As Hybroid said, you have nothing to lose seeing a broker. They already know the best rates they can get you at the moment depending on LVR and will likely tell you what they are even without signing any papers.
I would go to a broker 100%, with any profession, you need to find a broker that is the right match for you. If you feel they're just after a quick application or you feel they don't have your best interest at heart then go to another one.
Usually there is no upfront fee to liaise with a broker but if you do tend to close with a broker, understand how they will be getting paid but also remember everything needs to be clear on paper to you.
A broker may get 0.5% commission with Bank A but 0.8 commission with Bank B but overall, you do what's best for your own pocket, not theirs.
+1 for using a mortgage broker.
they make life really simple. they do all the running around and present you with the options.
the broker really reduced the stress for me when I was dealing with a difficult vendor who was acting like they were trying to put me into a situation where I'd have to pay them a penalty coming up to settlement date.
Here's the thing…
https://www.ozbargain.com.au/node/752395
Not saying this happens to every broker , but who knows who's next , or who's "aware" they got compromised.
They are free so technically there's no downside. Some of the better ones will also check every year to make sure you're getting the best offer.
The fees are all hidden in the lower rates they're offered from the banks.
Yes. I think they are useful. Especially in refinancing and being the lazy ass I am lately. Might as well use them to the full extent!
I’ve used one for advice on my options if I were to sell my existing and buy another property, and they were brilliant. Even more so considering I didn’t pay a cent. I will definitely get in touch with them if and when I realise these plans, or even just when I need to refinance.
Yes. I have now used a broker 5 times now over 10 years and wouldn’t seek finance without one. They have inside knowledge of what applications need in order to go through various lenders and to be successful. The last thing you want is an application for credit being declined because you don’t meet their opaque criteria. It is true that if you have a very basic single property with reasonable LVR you may well be able to get a lower rate with an online lender, however if your situation is even a little more complex. Ie. More than 1 loan, multiple properties, single income family, higher lvr, inconsistent wages etc, I think it pays to go with a broker.
The only general clause is that many will ask you to commit to a lender for an 18 month to 2 year period, as this is usually the period of time they need to receive their commission from the banks. This is commonly called a clawback clause in the contract paperwork you sign with them.
A broker won’t necessarily get you the lowest rate, but they may get you other features…ie
-The ability to draw down excess funds in addition to your required loan and sit them in offset (which may act as a buffer for you). I.e. your mortgage required amount is 350k, but they are able to find the lender that will offer you 380k on the property meaning you have 30k sitting in offset.
-The ability to find the one lender that may borrow you that extra 50k that you need to close the deal.
- The structuring knowledge to ensure loans are not cross collateralised with respect to PPOR and investments.
Another big positive is that they generally handle all of the paperwork. With mine, I fill in the fact finder documents at first engagement and provide all of my supporting documentation and they essentially fill in all of the applications and liaise directly with the lenders on my behalf. Having a single point of contact and not having to talk to a single person at the bank or on the phone is a big plus in my books.
Oh and on 4 out of 5 of my refinance occasions, they have secured rates well below the publicly advertised levels or with permanent discounting off advertised rates.
You get what you pay for. In this case, nothing.
Being in the finance industry for 10 years and the simple answer to your question is yes it’s worth it.
You need to find the right broker once and then stick with them. Unless you jump every 3-6 months from 1 bank to another you cannot beat a cashback broker from ozbargain.
There is a myth that brokers try to sell the bank that pays more. It could be true for very few but not all. It’s not worth it for them. The difference is around 0.05% of loan amount and risk of loosing clients and reputation is way bigger. So most won’t do it.
They will beat the offer you have for sure, no matter the bank is on their panel or not. And one thing people forget is that interest rate is only 1 piece of the puzzle. There are fees too and credit policy. Not everyone can go to every bank.
Banks capitalise on the fact that people get busy with their lives. Broker will look for a better deal atleast every 2 years because it helps them too.
Like most things in life, if you go and do something blindly = expect to be ripped off.
At least do some homework/research on what loans are out there and be informed. You don't have to be an expert, that's why the broker is there for, but at least have an idea.
I didn't think it was worth it. I had a good deposit, wasn't borrowing a huge amount and had very little expenses. The broker kept asking for more information, then more information, then if that wasn't enough, they needed more information. When I refinanced directly with the bank, the process was much quicker and simpler. But both times, I had no doubt I would be approved. If your finances are complicated and you're not sure if they'll approve you, then try a broker.
That's just my experience though. Seemed like a waste of time for me going through a broker. I feel like I could have done the same thing with a quick google search, but caved to the pressure of those around me saying I should go with a broker. They were wrong.
Also beware of clawbacks.
My very first time getting a mortgage, I used a broker since I had no clue how it worked. I don’t think I got a special deal, just what was advertised by the bank in public. Since then I’ve refinanced thrice, directly with the relevant bank and it’s been very easy. IMO if you have simple situation (salaried, sufficient deposit, no/few complicated extra income sources) a broker won’t really make a huge difference. My 2c.
When we got our home loan 4 years ago or so we used a broker, "state broker of the year 5 years running" or some such tosh. They plugged our income into a computer and printed a few sheets of options, which was pretty much the bank who we'd already noticed from advertising seemed to have the most competitive rates at the time. The rate offered was the same as in the ads and the broker made no attempt to get us anything better.
Anyhow, we went through the broker and the only function they offered was to be in the middle of a game of Chinese Whispers where the bank would ask them for something, the broker would pass the request onto us, we would pass it back to the broker, who would pass it back to the bank.
There was no real benefit to using the broker, in that we largely had to fill in the same paperwork as if we'd gone direct and, as above, the rates were the same.
Three years later we refinanced (our broker had made no attempt to contact us, other than an annual Christmas card which was being sent to our former rental address, lol). I used mortgage comparison sites and made contact with the cheapest bank myself. We filled in all the paperwork without the middle man and boy was that process so much smoother. I have zero interest in ever using a mortgage broker again.
Regardless of whether or not you go with a broker you're still going to have to submit all the same paperwork, chase up all the same income statements, produce all the same estimates of expenses, answer all the same questions, sign two versions in five places of exactly the same mortgage agreement, and organise all the conveyancing yourself. If you still think that your mortgage broker is going to add value after that in comparison to using a mortgage comparison website, then sure, go crazy.
My observation is that the people who swear by using a broker have never used anything else. I've never seen anyone say that they self-financed first, hated it, and then later used a broker to refinance and it was so much better.
The broker we went to 15 years ago took down our details, did some calculations and then got back to us in a day or two advising that we wouldn't be able to purchase a home. At the time, we were very new to the property market, so didn’t know much about LVRs. We did not know that we could buy a property with less than 20% deposit (with LMI) and the broker didn't advise us either. He literally came back with no options; it was a point-blank no. That got us really worried until my wife went into our bank, met with the lending manager and got a pre-approval. We purchased our new property in less than 6 months after we got the pre-approval. To summarise, my experience with that broker was really underwhelming. That single experience put us off brokers completely, but I'm sure that there are a lot of good brokers out there. We are still with the same bank and have a very good relationship with the lending manager.
YMMV, just like GPs, some are good and some aren't
I used one for a cashback, their attention to detail was lacking so the forms needed to be resubmitted.
They didn't notice the incorrect address and also didn't notice the rate lock hadn't been applied. This took time, then they had me chasing up a form that they were meant to sign.
There's good ones and bad ones, and some that may specialize in structuring multiple loans would be handy.
Will go with another one in the future for cashback, or if I have an investment property.
I talked to a broker then didn't use them for signing up the loan in the end, so the cost to me was nothing (although I felt kind of bad, but they didn't have the bank I ultimately wanted).
Incredibly useful as it helped me organise my finance, calculate how much I could borrow, they advised me on how many credit cards to get rid of and talked through the extra costs involved. They were about spot on.
As mentioned by others if you have problems with your finances (self employed or inconsistent records, it's better to use broker. In my case, I don't have problems with my finances and I went through once with broker. Initially, the interest rate was great, but this is always honeymoon rate and after the honeymoon period was over, you need to keep looking for better ones. After that I switched and applied myself and never had any issues. if you don't need offset account, unloan has good rate for existing and new customers, I believe lower than your advertised rate but you can't be first home buyer. You can go with any bank first then move to unloan.
Mortgage brokers, and Buyers Advocates, are 100% 2 things that I recommend when purchasing a property
Honestly, I would 100% recommend it for anything but a basic home loan.
Not only do they (try) to find you the est deal, they will deal with the banks so you're not wasting time filling out unneeded forms, asking questions you don't need to ask after being on hold for 45 minutes, and trying to find out what needs doing before the last minute.
Obviously YMMV, and theres plenty of slack brokers out there too, but just from a stress point, I would recommend one.
100% go with a broker.
I have a bit of a horror story of using the wrong broker but it didnt stop me from still engaging with a broker as they can still do the heavy lifting for me in terms of finding not only the best deal but also to structure my home loan properly and help me strategize my property buying.
It's my first property purchase with spouse, and the broker picked a non-bank that charged me interest at 4.09% when everyone else was on 2.7 - 2.8%. He strongly argued that we're not qualified for any other lenders with the lower interest rate. We later found out that non-bank tends to offer more commission to brokers and so brokers are incentivised to go with them.
Point is: even with a broker, you need to still do some due diligence and not simply accept whatever they're telling you. But if you found a good one that's on your side, stick with them.
If your situation is pretty vanilla then you should be able to do the running around yourself. But if it's not straightforward, a broker can help - they should know which FIs will accept employment on probation, higher LVRs, 100% of bonus / commission etc and help you get a higher borrowing limit. Saves you traipsing from bank to bank checking out their policy in regard to these.
I work for a NBFI, previously a bank as lending manager for many years, and when I was ready to refinance away from that bank I went to a broker as there were a couple of curly bits in my situation. He helped immensely both with the refi and with a subsequent purchase. Sure I still had to send him all the same docs I'd have to submit to a bank but at least I didn't then have to deal with that bank, or push my agenda. My broker got paid for an outcome so he pushed to make sure he got one :-) .
1) They have a wider range of options open to them and can better assess your case and suitability to certain offerings by tweaking the "right settings" from their knowledge base. They can also negotiate with counterparts in banks/lending institutions for slightly better rates and added bonus features like cashback. They also clearly explain to you what offset account vs redraw account means in real world terms.
2) Both. They have a really good incentive to save you money so you sign-up with them and they can then get their commissions. Otherwise you would simply go elsewhere and they lose out completely.
3) It's always worth having a chat with them and see what they can offer. You lose nothing. Try this guy: https://www.blueowlfinance.com.au/book-online