Is A Mortgage Broker Necessary?

[Kristine..]

I rather like the old saying:

'He who represents himself in Court has a fool for a lawyer'

In October last year Mike and I bought a property which we had no plan or intention to buy

At that time the cash out provisions were tightening across the board but hey! I've been in this business seven years, been around the block once or twice, have enough equity to last my lifetime and besides, we had signed an unconditional contract so, like the ancient Greeks burning the boats, there was no going back

So I hit the phones and the BDMs and pounded the beat. I won't go into all the details but eventually got a cracker of a deal with a great refinance, cash out and a grade A purchase product

But I actually used another Broker to do the refinancing and paid them a significant amount of money - quite a few noughts after the $ sign - for that deal.

Never have I begrudged paying anybody for anything. I buy petrol, I pay for it. I buy bread, or milk, or money, I pay for it. This Broker - who I had come across just by chance - knew something and someone I didn't - in the end the lender said 'Hey, I know Kristine, we'll sort it out' and I worked directly with the lender - and very happily signed the disbursement authorities to pay the other broker.

There are times when we can 'do it' ourself. There are times when we need some help

God, grant me the serenity
To accept the things I cannot change;
Courage to change the things I can;
And wisdom to know the difference.

When I realised that, just for once (!), I couldn't 'do it all myself' (even though I had by then found a lender which would do most of the deal and had started the application process with them) and accepted that I needed help, the chance for expert help came along and I was very grateful for it.

So, Michael, only you know when - and if - you will need help

Some people are quite comfortable wandering into their local Branch and having a chat with the person they know, and end up with a deal they are happy with.

You haven't said if this is your first or your tenth property, or if there are any unusual circumstances about yourself, your circumstances or your property.

I had a very complex refinance at a time when the market had closed ranks. You may have a real 'vanilla deal' and have the time to amuse yourself tracking down whatever it is that you are looking for

Only you can answer your own question but there is no 'should' about it.

Whatever you choose to do will be the right thing to do

Good luck and enjoy the journey!

Cheers
Kristine

 

[Michael.Knight]

Very insightful reply Kristine, thanks!

Im chasing my 2nd IP, with a grand goal of one day owning 10 IPs... Because I want to stay in this game long-term I obviously want the best mortgage since this is the early days...

I thought it was as simple as visiting ratecity, but I didnt realise the importance of a broker from what other people have said on here in regards to mortgage flexibility...

 

[Spectre]

An interesting note and no slight towards anyone...

But people often say they dream of owning 10 IPs, the number of em that actually do achieve this is another story. It gets to be too much for them.

 

[skater]

But people often say they dream of owning 10 IPs, the number of em that actually do achieve this is another story. It gets to be too much for them.

Owning 10 or more IPs is no harder than owning a couple. The hardest thing is keeping tabs with the bookkeeping. Did I mention I HATE bookkeeping.

I think that people say this, but get distracted/find other interests/have difficulty with finance etc. Those that find it gets too much for them stop WAY short of double digits.

 

[Spectre]

agree w/you skater 100%

 

[alexlee]

But people often say they dream of owning 10 IPs, the number of em that actually do achieve this is another story. It gets to be too much for them.

Better to aim high and fall short, than to aim low and get stuck low, no? I've always believed that by aiming high you are open to more possibilities. You achieve more because you can imagine it. You might not achieve as much as you imagine you could, but you'll do better than if you can't imagine it at all.

 

[bradje]

There's a good book to read which mentions some of these very thoughts ..."Why we want you to be rich" by Donald Trump and Robert Kiyosaki (Rich dad poor dad).
If you can find someone who is dedicated to the job and studying it and is winning, then sure, invite them on to your team. You can learn a lot from people like that.
We recently got out 4th IP, and used a local broker who had been a chartered accountant. This guy really knows about money and was able to save us quite a bit of green stuff in doing the latest deal with the Banks.
So yeah, if you really want to put in hours of study and learn the ropes then do so. Most people I know are either too lazy or disinterested and aren't prepared to really learn the art of deal making and negotiation as well as downright haggling with bankers. In fact that's why they put their money in to Super Funds managed by Tom, Dick or Harry. (Yep, and yours truly has been there and done that too ).
Nah, a good broker who is keen on their work and a good accountant and solicitor, are well worth getting to know.
Cheers,
JB

 

[birchcorp]

In my defense, I did not mention lodging 5 loans, in fact you may lodge nil loans with the broker- Go directly to the bank if you wish. What I did state was to talk to 5 brokers, do your due diligence. Self education is the key to wealth creation.

Further, we cannot all own 10 IP's, for the many, owning one property will be the single largest financial investment in there life.

 

[Michael.Knight]

If you can find someone who is dedicated to the job and studying it and is winning, then sure, invite them on to your team. You can learn a lot from people like that.

Excellent point, thanks Brad!

 

[Perp]

And once you're with the wrong broker, you're stuck with them.

My understanding is that you can ask your new broker to manage your "old" loans, and they'll contact your old broker and arrange the transfer.

Brokers: is this correct, or not that simple?

 

[Rolf Latham]

Um not quite that way

The new broker doesnt need the old brokers "permission" to work with the client on old loans.

In some instances the lender will want the client to sign an authority so they can release info to the new broker on the old loans

ta
rolf

 

[Perp]

The new broker doesnt need the old brokers "permission" to work with the client on old loans.

In some instances the lender will want the client to sign an authority so they can release info to the new broker on the old loans

Thanks, Rolf. The point I was trying to make is that, contrary to deejay's concerns, you're not "stuck" with a broker who you're not happy with (which you've confirmed, thanks).

 

[Kristine..]

It sounds as if deejay has loans with a Mortgage Originator, or a ‘Mobile Lender’ or a Franchisee, rather than with a broker

Brokers are introducers, referrers, intermediaries between the borrower and the lender

Some companies lend their own funds, and some companies ‘white label’ wholesale funds, but these are not ‘brokers’.

According to Word thesaurus, a broker is an agent, a dealer, an adviser, a negotiator, eg a stockbroker, an insurance broker etc

We do not instigate the transaction, we facilitate the transaction.

Insurance Agents or Managed Funds Agents may have a legal and ongoing relationship with the customer, but I haven’t come across any such relationship between a Mortgage Broker and their customer.

I never refer to my customers as ‘Clients’ because my customers do not ‘engage’ me and do not pay me. My customer may ‘instruct’ me but that’s about it.

There is a poll on at The Adviser http://www.theadviser.com.au/bulletin-poll about ‘who owns the client’ – well, nobody ‘owns’ anybody else. The buyer of goods or services can buy them wherever they will.

Some lenders, to avoid accusations of ‘branch snatches’ of borrowers (the lender or Branch restructuring the loan and then treating the restructure as a refinance and voiding the lender’s commercial relationship with the broker), to display industry loyalty to the original introducer, require any post-settlement dealings to be referred back to the broker, but this is not mandatory and if a borrower doesn’t want to deal with that broker they cannot be compelled to do so

Equally, there may be some customers that the broker would rather not deal with, so it cuts both ways!

Brokers do not provide ‘advice’ and generally do not manage the loans and with only a few exceptions, are not able to do the post-settlement after-sales service tasks which we would generally expect of eg a bank branch. For example, I cannot see the balance of any loans, provide pay out figures, set up internet banking etc If I make an enquiry on behalf of a customer I must provide the lender with a Privacy Consent signed by the borrower to allow the lender to talk to me post-settlement.

Sorry that deejay has had a less than satisfactory experience but it can’t have been too bad if he/she used that ‘broker’ or ‘mobile lender’ or ‘franchisee’ for three loans. I would have thought that if the first experience had not been too flash that you wouldn’t bother using those services again.

As with everything, we can lump a lot of meanings into one word. As a broker, I am quite clear about what I can and cannot do, and there is a bit of caveat emptor involved as well, in that the customer should also be clear about what the broker can do for them and what is reasonable to expect in the short and long term.

That way, there is no ‘being stuck’ with anyone or any company and every borrower should be a happy borrower!

Cheers
Kristine

 

[Shaneelastic]

Hi,

Just wondering if I could transfer some loans one broker to a new broker so that the new broker gets the trail??

 

[Rolf Latham]

Hi Shane

Generally no, the broker has provided a service and part of the payment for that service is a trailing component.

And thats because the loan would have to be refinanced to the new brokers code.

ta

rolf

 

[Perp]

Generally no, the broker has provided a service and part of the payment for that service is a trailing component.

And thats because the loan would have to be refinanced to the new brokers code.

Interesting, I didn't realise this. I thought I'd transferred a trail from one broker to another a few years ago; perhaps the lender/branch made it look like a refinance, as you say.

So if the trail can't - generally - be transferred, do new brokers, who agree to oversee your "old" business, do this for nothing in exchange for having your new business?

Edit: I actually think that it's more ethical for the trail not to be transferable, but I thought this was the business model that Refund Home Loans et al were based on, ie that they could assume the trails?

 

[Rolf Latham]

So if the trail can't - generally - be transferred, do new brokers, who agree to oversee your "old" business, do this for nothing in exchange for having your new business?

Edit: I actually think that it's more ethical for the trail not to be transferable, but I thought this was the business model that Refund Home Loans et al were based on, ie that they could assume the trails?

Beware of some branchies. Some will do anything in these tough times to rewrite a loan so that they may look to meet budget. In some instances the client is told that they are working in "conjunction" with the broker and this " restructure" is needed..................

Point 1, yep, the new broker hopes that one day you will do some business with then

Point 2, the rebate business rebate some upfront and some or all trail. But the only way they can get to do that with any of your existing biz is to "churn" it.

This is why some lenders have a distaste for this style of business model

ta
rolf

 

[Learnings]

Is a broker necessary? no

Is using a broker worthwhile? yes

There is no negative with practically unlimited upside.

I would not be a homeowner as we speak if it wasnt for mine, no doubt about it. She definetly earned her $.

You dont draw your own building plans, you hire an architect.
Now imagine if the architect drew the plans for you and got it through council and the builders paid the architect?

 

[joycenmat]

I am looking for a borker now. In a month or two to help with Two IP loans also later on re financing. It will be the first time i have re financed so closer to november i will definately be seeking help!

Everyone here is imparting knowledge. It is good support for someone like myself.

One day i hope to repay the favour with people who at that stage will be young and i older.

 

[Amadio]

However, mortgage brokers have access to the subprime lending market, as well. .

How thrilling. We in Australia have just felt so deprived.