The Royal Commission into banking has meant that it’s harder than ever to be approved for a home loan, which can lead to low levels of confidence in buyers.
Lately, I’ve noticed a trend towards more buyers using a mortgage broker to cut through the red tape and find the best loan.
I spoke to Alan Hemmings at Oxygen, our recommended broker, for further insight into this trend. Alan has been the General Manager at Oxygen for six years and has worked in Finance, including managing sales teams in banks, for twenty years.
Why use a mortgage broker?
Alan told me that a mortgage broker offers convenience for the buyer: instead of doing the legwork of visiting different lenders and comparing offers, a broker will do this for you.
“If you’re dealing with one broker you’re dealing with forty banks instead of going to each one individually,” Alan explained. “There are still some really cheap interest rates out there and brokers will negotiate with the lender for a better rate, but some people stick with their bank when they could be paying less.”
As well as navigating all the policies, brokers also take care of all the paperwork and will meet at the client’s choice of location and time.
And of course, mortgage brokers are free for the buyer, because they take payment from the lender when the loan is secured.
How can I choose the right broker?
Having a good mortgage broker is paramount. Buyers can check two online professional registers to confirm that brokers are accredited: the Mortgage and Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA.)
“Everyone should do a check online to see whether their broker has a profile or not,” Alan recommends.
How can I tell the good from the bad?
Alan said that good communication was essential in his profession, and that the best brokers listened closely to their clients. “The best brokers get an understanding of what [their clients] want to achieve and make recommendations about what is best going to suit their needs,” he said. “For example, at Oxygen we have forty lenders on our panel, but if a client wants an offset account on their loans only a few lenders will offer that.”
Alan said it was important to look for a broker who had a wide range of options. “Some brokers favour certain lenders and that’s not always the best outcome for the client,” he said.
It’s never too early to talk to a broker
Mortgage brokers will help clients prepare for the purchase before they have even looked at a property.
“We help people to understand what they can and can’t afford, whether it’s a first home buyer or anyone else,” said Alan. “Having finance ready to go before you go looking for a home is important.”
Alan said he’d seen a few clients who had put a deposit down on a home, only to be turned down for a loan when they went to the bank – especially after the Royal Commission.
“Now more than ever people should be using brokers,” he said. “Some banks are changing their policies weekly at the moment as they adjust to the regulators. A broker can give the client a choice and when they look at a property or bid at an auction, they know exactly what they can afford.”