Why should you use a mortgage broker?

15October 2020

How does this sound… 

Someone does your food shopping, negotiates the best prices, ensures the food is just right for you and your specific situation, then delivers it to your door?  

Sounds good right?  

Well…. That’s a high level view of what Mortgage Brokers do for you – for FREE.  Yep, you don’t pay them, the lenders do.  

Years ago, going to a broker was seen as a secondary option, if your bank had turned you down.  

Not any more.  In this day and age, it’s straight up smart play to use a broker.

Let’s look more closely at some reasons why you should use a Mortgage Broker:

Better Deals – everyone loves a good deal right?  Your bank is obviously only going to sell you on their own deals.  A broker will shop around, and ensure you get the best possible deal based on your circumstances.  This move alone can save you thousands of dollars per year.  

Advice – brokers are qualified to give advice, that banks simply cannot give.  Your broker is like your own personal money coach, working for you, to take all things into consideration, then shop around for you, and even use networks, relationships, and old school haggling, to get you better deals and a more well rounded deal that suits your situation.  Do your research, as indicated below to ensure you find someone with the right skill set for this. 

Comfort and confidence – this is big stuff!  Having a broker working for you, makes this stressful situation so much easier.  Its very useful having that skilled extra person to discuss things, and take your stress levels right back down.

Network – brokers will have a network of trusted people they work with, that can help you.  Property valuers, accountants, lawyers.  Work with a trusted team to help you achieve your goals. 

Select the right home – all brokers do is work with people purchasing property, that’s it!  The knowledge they have of the market is extensive.  You can tap that knowledge and rest at ease with that extra brain working as part of your team. 

Being available – unlike the banks, you can usually contact your broker at a moments notice, to discuss anything regarding your property purchase, your mortgage, your situation.  Brokers are almost like a life coach on call!

The Market has spoken – many years ago, people were happy with the banks, and mortgage brokers weren’t getting many deals done.  Now in New Zealand, almost half of home loans are done via brokers, a huge increase.  People are voting with their feet – using a broker is a great service.

Okay, so you can probably see that using a broker is absolutely something you should consider.  

In Australia and the UK,  more than half of all loans go via Mortgage Brokers, so we predict the NZ market to keep using brokers more as well. 

What questions should you ask your broker, to ensure you pick the right broker for you?

Here are some to get you started:

How many lenders do you deal with?  You want to be sure that your broker deals with a wide range of lenders, to give you the best chance of the best deal possible for your situation. 

What are your fees and commissions?  Now, we did say earlier that brokers work for free.  However, everyone gets paid by someone, so check in with them about how the lenders pay them, what commissions look like, and also if there is a fee for engaging their services when you do not proceed with a loan via them.  

What happens if I refinance, are there fees involved?  This can vary from broker to broker, so be sure to check this out.  

Can I please see some reviews and testimonials?  Generally, a broker who has been in business for a while will have publicly available Google Reviews, as well as Facebook recommendations.  Check these out.  Still ask for testimonials from the broker too.  Be sure you establish their background, trustworthiness, and credibility.  

If you look at this image, you’ll see why doing your homework is useful.  Go to Google, enter in something like “mortgage broker {your location}” and you’ll get the Google My Business recommendations.  

You don’t get in one of those preferred spots unless you’ve been around for a while, and know what you are doing.  If you look at Michael in our example, he has 84 reviews, so well worth calling. 

Links are there to the website, the phone number, etc.  Do that research, make a shortlist of brokers, and just get on the phone!

You can also see “recommendations” for businesses on Facebook.  

If we use Michael as shown above, you can see from the image below that his Facebook page has a further 27 recommendations, and they are all top quality.  This is the type of homework YOU need to do before picking a mortgage broker.

Some useful tools for you:

Interest website – keep on top of new financial information and news:  https://www.interest.co.nz/

Sorted Mortgage Calculator – do some number crunching yourself:  https://sorted.org.nz/tools/mortgage-calculator

The New Zealand Mortgage Magazine – keep on top of newest interest rates and deals – https://tmmonline.nz/

NZ Property Investor Magazine – NZ’s leading property investing publication:  https://www.propertyinvestor.co.nz/

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