Through recent client interaction regarding the role of a broker and how we operate in comparison to a local bank branch I wanted to touch on the main focal points and convey what I perceive to be the main differences.
Mortgage broking can be defined as intermediaries acting on behalf of lenders, primarily aiding borrowers in sourcing and applying for mortgage finance (for both owner occupied and investment residential real estate purposes) & in refinancing existing mortgages. Simply put, I work for you as the client; not the bank and I place great emphasis on this to all my clients.
Many think as a mortgage broker we are in direct competition with the banks; however as a mortgage broker I have the ability to write different loans through numerous lending institutions, I am not in competition with the bank. If anything, it is the lenders who are competing to obtain the business of a mortgage broker. This can be re-iterated by the fact that mortgage brokers hold 51.5% of the residential lending market share.
According to Mortgage and Finance Association of Australia chief executive Siobhan Hayden, one in every two home loans is now written by mortgage brokers and this share looks set to increase.
‘The broker channel is going from strength to strength over time and represents the consistent efforts that brokers are making to offer the prix du tadalafil en pharmacie best possible service to their customers,’ Ms Hayden said.
I am not voicing any negativity in what the local branch can offer, merely I am emphasising why I firmly believe it is advantageous to use a reputable local mortgage broker. As with everything, people are going to be sceptical for varying reasons when someone is trying to sell their services and broking is no different. Scepticism quite often revolves around the subject of commission payments to brokers. Although each broker may have a different structure within their individual company, lenders pay a very similar % of commission to brokers across the board.
As mortgage brokers, our goal is to provide an unbiased opinion of the best possible lenders and products available in the market. I give my clients choices and work with them to find the best product that suits them, not because there is an underlying incentive. Recent compliance introductions now require brokers to declare all commission payments received from the corresponding lender to the clients which I firmly believe is a positive move for the industry; whilst ultimately providing further comfort to the client that their mortgage broker has their best interest at heart.
As a broker, we act as your first point of call for the life of the loan which can greatly curb the time it takes to make amendments to your loan compared to dealing directly with your lender. Our aim is to provide an ongoing service for the life of your loan, creating long-term relationships through an exceptional personalised service.
Due to increased activity within the mortgage broking sector, clients are reaping the rewards of competitive interest rates. For lenders to gain business, brokers are offered pricing tools through a lending channel to access the best possible rate available. Banks are having to become increasingly competitive in regards to rates with one another to attract a mortgage brokers business.
Mortgage brokers are spoilt for options when it comes to placing a client, due to being able to access over 25 lenders at any one time. Many clients are unaware that each lender has their own policy and this may not apply to your particular circumstance. In recent times I have seen many a client visit our mortgage broking office in Adelaide as a result of their bank not being able to assist them with a home loan due to a policy implication (casual employment, length of employment, self-employed etc.) Using the services of a broker from the outset will enable an array of options across the lender panel.
In summarising the main differences between using a mortgage broker versus a bank I emphasise again on the following:
- Personalised service
- Convenience of the broker coming to you and working around your schedule
- Providing the client with numerous products from varying lenders
- Competitive market enabling the client to be rewarded with great interest rates.
For more information on anything included in this blog or to seek assistance with your finance needs don’t hesitate to contact me.
Matt Penny
0411 110 151