Are you looking to enter the property market?
You’re not alone. Thanks to more stable conditions and government incentives, over the last few years there has been an increase of first homebuyers purchasing a home.
But if you’re thinking about taking your home loan application straight to the bank because it’s a convenient choice, consider the reasons why most people avoid lenders and engage an expert to find the most suitable home loan.
More than half of mortgages in Australia are carried out by mortgage brokers. There is also compelling evidence to suggest that the benefits of brokers are well worth outsourcing the task.
What do mortgage brokers do?
A broker is the conduit between the financial lender and the borrower.
Their first task is to assess your financial position and establish how lenders will evaluate your borrowing capacity based on your individual money situation (savings, debts and assets) as well as your credit score.
Once your finances have been assessed, brokers use their expertise to identify a loan from their panel of lenders, which best suits, your needs. A broker’s panel of lenders are the financial and credit institutions, such as banks, which they apply to on your behalf for the home loan.
Why should I engage a broker?
Once your finances have been calculated, it’s time for the real value of a well-networked and qualified broker to shine.
While you may have the time to invest in contacting various lenders to do your own home loan comparisons, consider that there are more than 3000 home-lending products generated in Australia to consider.
Even if you query a large number of banks, it is likely that there are potentially dozens of home loans suited to your particular situation that only a reputable broker will be aware of and able to access.
Engaging a qualified mortgage broker to do the legwork for you will save you the time and headache of loan comparisons as well as sorting through establishment and application fees. But in most cases, the main benefit is that you will likely end up with a lower interest rate or offer that only a broker can find through their well-established network.
Recent research suggests growth in broker numbers in Victoria has also influenced the number of successful new lending. Keep in mind that a broker will only apply for your loan through a lender that they know will likely approve it, which provides you with little risk that your application will be rejected or negatively impact your credit score.
The advantage of utilising an expert as a first homebuyer is that they know exactly what you’re entitled to. Using a broker will provide you with peace of mind that if you’re able to receive any government grants or incentives, your broker will inform you and help you through the process.
How much do mortgage broker’s charge?
Buying your first home can be a stressful time, so it’s understandable that you may be anxious about the cost of receiving financial advice.
But you don’t need to fret over finances when it comes to engaging an expert – you do not pay to engage a mortgage broker.
Brokers earn their income through commissions, which are paid to them by the financial lender serving your loan – not you as the borrower. The financial lender that you choose will pay your broker a commission for referring their product to you.
“In addition to finding the best home loans and rates that suits your needs, mortgage brokers also assist by providing advice, education and clarity about the whole process and managing client expectations so that they understand who does what in the process to help them through. Essentially, they are there to hold your hand throughout the process,” says Manoj Kaushal, My Expert Managing Director.
Brokers aim to provide a seamless experience by removing the emotional and unnecessary stress out of the process. Especially now with clarity of Royal commission recommendations so far, professional advise and expertise has never been so important.
In an industry where paperwork pyramids abound and there’s plenty of fine print to be wary of, having a qualified broker who can answer your questions and discuss all your options with you can be invaluable.
MyExpert has qualified, experienced brokers who have a large panel of reputable lenders. Our specialists are passionate about helping first homebuyers achieve the dream of home ownership.
Have you got questions about anything in this article? If so, please call us today on 1300 693 973.
Disclaimer: This content is generic in nature and not to be used as independent financial advice; readers should seek independent legal advice in the instance they feel they require it.