But even if you've been religiously saving money ever since you started working, it’s unlikely that you would’ve be able to accumulate enough to buy your dream property outright – especially given prices in some capitals like Sydney and Melbourne. Generally, you will need to take out a loan to be able to pay for the house that you've chosen as your permanent residence. And this is where mortgage brokers can use their expertise to assist you in meeting your home buying objectives.
What is a mortgage broker, exactly?
A mortgage broker is an intermediary - someone who acts as a middleman between borrowers and lenders while helping a home buyer get a home loan. A broker does not represent any single lending institution; instead, he works with a number of lenders as an independent agent. The broker will evaluate a home buyer's specific needs and financial or credit situation, and will match that with the lender that offers the best loan arrangement.
Mortgage brokers are not to be confused with mortgage bankers or mortgage originators; the latter are direct lenders — the people who work for the banks, credit unions and direct financial institutions. More importantly, bankers can only sell and process the loans and mortgages originated by the institution that employs them – causing an obvious self-interest agenda.
What do mortgage brokers do?
There are a number of steps that mortgage brokers can take to help you secure the best loan for the property you set your heart on.
The first step is to assess and evaluate your home loan needs — naturally, each client will have unique specifications and purposes, so the broker will need to get a clear picture of what your particular circumstances are.
From here, the next step is to calculate how much you are eligible to borrow. Knowing this figure will help you determine the price range that you can safely aim for.
The third step is where a broker's work with several lenders comes into play; he will make comparisons between these lenders to narrow down the list of home loan products that can help you meet your goal. The broker provides advice on the best options you can choose from in terms of the repayment frequency, credit card facilities, account fees and finally, interest rates.
Once you, the borrower, decide on your preferred loan, the broker will take care of all the paperwork and processes necessary to secure the home loan from the selected lender. This includes getting a pre-approval up to making sure that all the accounts are set up correctly after settlement of the property.
Keep in mind that the services of a mortgage broker need not be paid by the home buyer, since brokers are paid by the lenders. What you get, then, is expert industry advice and assistance from brokers who are well-versed in property loans and who are in the best position to help you get that much-coveted loan — so you can take a step closer to your dream of home ownership.