Getting a mortgage is a big deal. Where do you go to find the best lender for your circumstances? What criteria will you have to meet? When and how do you apply? There are so many questions to navigate. Fortunately, mortgage brokers have many of the answers.
A mortgage broker is an expert when it comes to understanding all the mortgage offerings. They have a deep understanding of the lenders, interest rates and fine print. Working with you to identify your situation, a broker can quickly ascertain which lenders and mortgage deals will be the most appropriate for you and your circumstances.
After discussing your income, size of your deposit, your credit history and whether you’re buying an existing home, new-build or an apartment, your mortgage broker will be able to draw up a shortlist of suitable mortgage deals. Along with this list you should expect professional advice to help you make an informed decision.
Are you getting the cold shoulder from banks?
Working with a broker is always a smart idea if you have had trouble getting credit in the past, are self-employed or find it hard to live up to a bank’s lending criteria. A reputable mortgage broker can help to understand your challenges and what needs to happen to fix the problems. There are second-tier lenders in the market who could offer you a home finance solution. You might have to pay a higher rate of interest, however this is balanced by the ability to achieve your goal – buying a property.
Pros and cons of using a mortgage broker
Using a mortgage broker comes with a number of advantages, such as:
- Time efficiency: Mortgage brokers have a wealth of knowledge. They will already know lenders and which mortgage deals are available. This saves you time involved with meeting a variety of banks and doing your own research. Having a network of contacts and a working history with lenders, a broker can quickly identify a shortlist of recommendations for you.
- An inside edge: Because they understand the market and interest rates, a mortgage broker may be able to negotiate a better deal than what’s advertised to the public from a lender.
- Experience: A vast knowledge of the mortgage industry means that mortgage brokers can answer all the questions and concerns you have. They can translate technical jargon into plain English and give you invaluable advice.
- Fees: Mortgage brokers are paid via commission from your lender, so they don’t usually charge you a fee for organising your home loan. However, check the fine print to see if there is a fee if you don’t end up using your broker’s recommendations.
- Assistance: There’s a lot of paperwork and admin required to submit and process your mortgage application. As someone who deals with this regularly, your mortgage broker can help you to prepare and complete your submission.
- Preparation: Your mortgage broker can assist with getting pre-approval of your home loan, allowing you to know your budget while you’re searching for your home.
- Hope: When a major bank won’t offer you a mortgage, a mortgage broker may be able to find you a lender who will.
Like everything in life, mortgage brokers aren’t 100% perfect. Here’s the downside:
- Limited lenders: A mortgage broker may only work with their own preferred lenders, which can limit the recommendations they suggest to you. It’s worth discussing the range of lenders your mortgage broker works with during the initial process.
How to choose a mortgage broker
Getting a recommendation from someone you know and trust is always a good place to start. Your real estate agent might be able to offer you some suggestions. You can also use Google search to hunt down someone with positive reviews.
There are a number of substantial mortgage brokers operating around New Zealand. Their websites provide a host of information, including rates and mortgage calculators.
Other brokerages are small or even a one-man-band. This isn’t necessarily a bad thing, if the key person has been a broker for many years. Check their websites for signs of credibility. You can also ask for references from previous customers.
It’s ideal to find a broker who has relationships with many banks, as well as non-bank finance providers. The more lenders they work with, the more options for you. Ask about fees, especially what happens if you don’t opt for the loan they’ve recommended. Check what assistance they offer for completing the application process. During these initial conversations, you’re likely to get a feel for whether this is the right person to help you with your home loan.