What does a Mortgage Broker do...(not facetious question)

Just a straight up question.

I know the motherhood answer of "we get the best deal for your circumstances" but I would like to know more detail.

For example do they give advice as to how to "best present" your financials - do they vet or summarize your financials before presenting them to the bank - ie they are eyes and ears of the bank to save the bank time - do they just pass everything on.

Or do they look at the financials and know what the banks need and then say yes/no.

Do their "connections" with lenders mean you have a better chance of securing a loan.

Stuff along those lines please.
 
Me and my hubby have consulted one thinking the mortgage broker can do better than going straight to the bank and here is what I found...it is best to go to a broker if you are not likely to meet certain lending criteria but if you know you passes the test why go with a broker. A broker make their money through commission, and sometimes they are willing to lower this to get you as a client. Which banks the broker recommends is not always the best, it may be the one offering the best interest rate but fails to provide the other services you may need. The broker may suggest some solutions to meeting the lending criteria but is not always legal so you are bound to take the risk on your own. I have consulted 2 brokers for my homeloan and asked them to beat what my bank is offering. One came out on par, the other offered low doc loan and interest rate about 2% higher. I didn't change banks. On the subject of getting the best deal, we have just asked our bank (Westpac) what are our new repayments and what are the exit fees for the 3 homeloans, the bank staff said that she will get the manager talk to us and see if they can offer us a deal. I think in this day and age, unless you ask you will not get things your way or positive results and there is nothing to lose to ask. We'll see what happens...
 
90 % of our task is not related to interest rate, fees and charges or indeed much to do with variable costs.

Its trying to work out what the client actually needs, compared to what they perceive they need...............that leads to some interesting long discussions.

Sometimes that approach costs you the business, but id rather walk than have to face the tears of a poor product choice down the track.

ta
rolf
 
If you're the right type of client, and you find the right type of broker, then a broker adds enormous value to your plans.

If you just want the best interest rate, then forget the broker and just look up Cannex tables. Likewise if you easily qualify with the lender of your choice, and only want to buy one property.

But if you want to continue growing to accumulate a portfolio, it's crucial to get good advice on the order in which you use various lenders, the best way to spread your business around, which lenders are best for which kind of investment, etc. It's much more complex and qualitatively different than most of us appreciate - and even some brokers don't "get it".

It's not as simple as your have X servicability and just shop around for loans until they add up to your servicability limit; it's nowhere near that simple. Your servicability varies between lenders, and can even vary depending on settlement order of the same two properties (eg buying A then B may be possible, but B then A isn't). A lender who's great for apartments may be useless for houses and vice-versa. It's extremely complex, and getting it wrong can cost you hugely.

A broker who simply says "we always use lender X for PPORs because they're the best" is probably not who you're looking for. A customer who rings up and asks "what's the lowest interest you can get on a $400K PPOR loan?" isn't the type of customer that brokers want, or can help.

A competent, skilled, informed broker, coupled with a client whon wants to accumulate and appreciates the complexities of the art, can be a match made in heaven.
 
Well said Ozperp and Rolf.

It's not as simple as your have X servicability and just shop around for loans until they add up to your servicability limit; it's nowhere near that simple. Your servicability varies between lenders, and can even vary depending on settlement order of the same two properties (eg buying A then B may be possible, but B then A isn't). A lender who's great for apartments may be useless for houses and vice-versa. It's extremely complex, and getting it wrong can cost you hugely.

This has never been truer than now.

Each lender has it's own lending criteria. You may get through on one bank and not another because certain criteria with that particular bank has not been met.

Working out what is best for the client is more than often the Broker's job and not that of the banks. I have seen this too many times. If a client does not think to ask how their loans are structured - the bank does not tell. (Cross-Coll and LMI). Good or bad, you need to be informed.

I have been able to save costs and fees for my clients by simply structuring their loans more suitably to their favour.

Regards JO
 
While I agree with the above, there are times you need to do the running around yourself as not all lenders are available to brokers ;)
 
OK thanks all.

What about financials that are sent to brokers - are they passed on to the lender in full or the broker summarizes and then sends to lender - how does that work?

I mean the broker does need to have an idea if the financials stack up - I do understand - but does he do more - is he the lender's 'trusted eyes and ears'.

Just curious.
 
OK thanks all.

What about financials that are sent to brokers - are they passed on to the lender in full or the broker summarizes and then sends to lender - how does that work?

I mean the broker does need to have an idea if the financials stack up - I do understand - but does he do more - is he the lender's 'trusted eyes and ears'.

Just curious.

Generally if a bank wants to see your financials, they want to see them in full. The bank doesn't trust brokers to do anything, except provide what is required to make an informed decision. However the broker can look at the financials and decide which bank is most appropriate based on what they offer. Banks policies on financial statements vary widely, there is a huge difference between the way ANZ look at financials compared to WBC or CBA etc, and this difference can definitely be the difference to getting a loan approved or not.
 
OK thanks all.

What about financials that are sent to brokers - are they passed on to the lender in full or the broker summarizes and then sends to lender - how does that work?

I mean the broker does need to have an idea if the financials stack up - I do understand - but does he do more - is he the lender's 'trusted eyes and ears'.

Just curious.

Hi Lee,

A broker is bound and abides by the Code of Banking Practice, Trade Practices, the ASIC Act, the Privacy Act and the Financial Services Reform Act.

A broker must abide by these acts and avoid breaching any of these acts.

Further more, a broker must be a member of MFAA which in itself requires certain accreditation and certificates from the broker.

A broker passes training and product education before becoming accredited with that particular bank. Once a broker is accredited with that bank, the broker is then representing that bank when selling it's product and must abide by all of it's laws and conduct.

Further more, a broker does not simply "adjust" an application to suit themself. All records are kept. A broker also gains a "rating" with most of the banks as well as their aggregator and submitting applications for the sake of "hoping/trying" to get them through would be foolhardy, negligent and incompetant.

Most applications with the Big 4 are submitted electronically now, so the broker fills out the Application at least twice. Part of the Originals - signatures and disclaimers are submitted in original format.

Most non-bank applications are still submitted in full original form.

I think oc1 is referring to the fact that brokers have many lenders they use but not all. Few would NOT have all the majors.

I hope this answers most of your questions and puts your mind at rest if you are considering a broker.:)

Regards JO
 
For example do they give advice as to how to "best present" your financials - do they vet or summarize your financials before presenting them to the bank - ie they are eyes and ears of the bank to save the bank time - do they just pass everything on.
Ours vetted everything, even did some fiddling. Nothing was passed directly on. She screwed up one thing - didn't set the new loan to IO but she realised that was a mistake and organised and paid the switch fee from P&I to IO.

I'd recommend her.
 
Nothing to stop us dealing with BoQ, ME, RAC or 101 other lenders.

Doesnt mean we will receive a commission for the introduction of the business but we dont all do everything because we get paid for doing it.

Certainly if it is in the interest of the client I would do so.
 
I assure you all that when I referred to "vetting/summarizing and the like of financials" I was absolutely NOT referring to brokers altering anything for their own inappropriate benefit.

I was simply curious if they were the "eyes and ears" of the lenders.

I'll expand on that: since the lender does not physically meet the borrower I thought the broker might be trusted to:

1. see that the financials were genuine - maybe ring the accountant of the borrower.
2. when applying electronically to the lender - enter the financials into the application - rather than say emailing a PDF of the financials to the lender.
etc..

in other words do things (especially financials related) that the lender might do themselves if they were dealing with the borrower direct.
 
no worries Lee,

I guess you may say we are the "eyes and ears" of the lender and are also bound by Anti Money Laundering regulations.

However, the bank has the final call and in it's own best interests- double checks everything the broker has submitted in regards to documentation and figures etc.

1. The bank does that - although the broker is responsible for collecting the Accountant's details for the lender to call the Accountant.

2. The broker does enter the financials into the application when applying electronically, with paper financials to back legitimacy up.

Regards JO
 
yes Richard, thats where fee for service comes on doesn it, comm isnt the only way to make a buck, and quite we also do our share of pro bono work

ta
Rolf
 
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