No matter your home-buying experience, navigating through all the available mortgage products can be a tricky process. And successfully completing the home loan application process for different lending institutions can be time consuming.

A mortgage broker could be just the person you’ve been waiting for. We can help you streamline the process. And together we can save you significant time, effort and money (in mortgage interest) over the life of your mortgage.

But you don’t have to take our word for it! Today we’re looking at the pros and cons of using a mortgage broker.

What is a mortgage broker?

A mortgage broker deals (and sometimes negotiates) with lending institutions to arrange a home funding for borrowers. A good mortgage broker will:

• Understand your financial situation and relevant life circumstances.
  
  
• Compare the loan products of banks, non-bank and specialist lenders to find products that best suit your situation.
  
  
• Explain home loan product features and how they work, cut through home loan jargon and help you understand what interest rates and fees are involved.
  
  
• Prepare all the paperwork to apply for a mortgage and then manage the process through to settlement.
  
  
• Act in your best interests in finding and recommending home loan products to you.

Pros and cons of using a mortgage broker

There are many reasons why someone might want to work with a mortgage broker. But like anything, there are pros and cons of using a mortgage broker. Here are some of both.

Pros of using a mortgage broker

Access to multiple lenders

Mortgage brokers give you access to their network of lenders, including banks and non-bank lenders.

At Lending Loop, we compare the home loan products of over 40 of Australia’s banks and specialist lenders. We go through each of those lender’s home loan products, to find the right loan for your circumstances.

Mortgage brokers can also know when lenders are offering a new mortgage product, reduced fees, or which offer no deposit or low doc home loans (and whether they are right for you).

Work through complicated situations

Mortgage brokers can access home loan products for what may be considered complicated situations. This may include an unusual employment history, or if you have a bad credit history. Or if the property you wish to purchase is unusual.

Minimise costs and save money

Mortgage brokers know the fees, charges and features associated with each home loan product – as well as the interest rates. They can talk to lenders, on your behalf, about application fees and costs associated with their home loan products. And they can even request that they be waived or lowered, potentially saving you hundreds or even thousands of dollars across the life of your home loan. It’s unlikely you could negotiate a similar waiver or reduction on your own.

Save time and effort

The research into home loan products, application paperwork, coordination and ongoing admin is done by your mortgage broker. Experienced mortgage brokers have time-efficient processes which help to determine which home loan products will best suit your situation. This can help to get your mortgage application approved more quickly and save you the time and effort in doing it yourself.

It can also save you from wasting time by approaching lenders who may not have mortgage products suitable for your circumstances.

Free for borrowers

Mortgage brokers are generally free for you, the borrower. In most cases, your mortgage broker is paid an upfront commission, and an ongoing ‘trail’ commission, by your lender (once your home loan has settled). These commissions are usually based on a percentage of the loan amount. This means that your mortgage broker is not paid if they are unable to find you a suitable mortgage product.

Cons of mortgage brokers

The best way to avoid any ‘cons’ of engaging a mortgage broker is to engage one that is experienced, reputable and accredited in the industry.

Mortgage brokers are not the final decision maker for your home loan

The two parties to a mortgage are you (the borrower) and the lender. The mortgage broker remains the go-between and does not have the direct authority to decide on any aspect of your home loan. 

If you happen to have a great relationship with a particular lender, you might be able to negotiate a better home loan deal than a mortgage broker.

Won’t have access to every home loan product

A mortgage broker doesn’t have access to every home loan product on the market (even though they will have a lot!). If a broker has a ‘preferred lender’ that does not have a home loan product suitable for your circumstances, you may not get the best deal.

It’s important to work with an expert, accredited and reputable mortgage broker with a strong suite of lenders. This will ensure they are independently working to find you the mortgage products best suited to you.

Some brokers may choose high-paying lenders

Because mortgage brokers are paid by the lender, some may suggest home loan products from lenders who pay them higher commission. This may not align with the best home loan products for your particular circumstances.

Of course, this is highly unethical behaviour. By choosing an industry leading mortgage broker, you can be sure that they’ll keep your best interests at the forefront at all times.

Lending Loop – a fantastic choice!

At Lending Loop, we embrace the pros of the pros and cons of using a mortgage broker. We compare the loans of more than 40 of Australia’s biggest banks and specialist lenders. And we don’t favour any lenders. We pride ourselves on our transparency and customer service in finding you the most competitive rate and best home loan product for you.

Get in touch. Let’s see how we can help you get the best mortgage for your situation today!