Why do we need mortgage broker?

[onetwothree]

We are thinking to buy our first IP.

Shall we use mortgage broker or deal directly with the bank?

Our accountant suggested to go directly to the bank.

So far we have had an unpleasant experience with 1 broker.

So we approached another broker.

I thought I was dealing with the broker himself, then after a few corresponds, another person was introduced and drafting our appl.
Since I have never met this broker, and he requested lots of information about us, I feel more uneasy to hand him more information.

Any advice? What are the advantages using broker?

 

[Aaron_C]

I don't like to toot my own trumpet - but brokers are beneficial for several reasons:

1. Brokers are more competent than bank staff (we are better trained), they have access to more lenders, and care about you, the client. For example, if you go directly to the bank, the person at the branch may simply make a credit enquiry without fully assessing whether you qualify for the loan or not. While it may seem innocuous, this careless behaviour can impact your ability to borrow in the future if your finance doesn't go through - as other lenders think 'why are there so many enquiries on this person's credit file'?

2. Brokers can tell you exactly how much you can borrow without trying to hard sell you into a particular product, and can also give you better advice on how to structure the loan (offset vs redraw, line of credit etc). Bank staff have very little idea about this. It can make a world of difference when it comes to an ATO audit (which are common for property investors).

3. It costs you nothing - the broker is paid by the bank. Plus the broker does all the running around for you, liasing with the bank, getting things organised etc.

I'm sorry you've had bad experiences before but I can assure you that the vast majority of brokers aren't so incompetent.

 

[Sim]

My suggestion is to avoid the large broker companies with lots of staff - go for the smaller boutiques, ideally one who is recommended to you. You should get better service.

 

[Peter_Tersteeg]

Most lenders are unlikely to give you true advice which works in your advantage with regards to loan structuring. In truth many brokers aren't savvy enough to give you this type of advice either. As Sim suggested, look for a broker that specialises in property investment (you'll rarely find this in the larger, more well known brokerage groups).

As an example, 2 weeks ago I met with a lady who was purchasing her first investment property. She'd seen two different bank managers about the loans and decided to keep her existing home loan with CBA and was buy the new IP with ING. Both lenders simply set up the loan over the relevant property with no regards to lending structure.

The result was she hadn't set up her loan over her house properly and was about to structure her loans such that about $100,000 would not have been tax deductable where it should have been. Had I not given her a very basic piece of advice, she would have missed out on $2,100 tax refund from the ATO every year, potentially for the next 30 years.

I'd suggest you read some of the finance related posts on this forum as there are several excellent brokers who post here regularlly. Two brokers from here who operate close to Sydney are:

Jamie Moore: 1300 656 299
Michael Chan: 1300 74 5626

 

[maadha]

You can certainly do all the running around yourself getting prices re loans etc but... This will take a lot of time and you may not know the best places to look.

We used a broker recently and they were great. We filled out a fair bit of information but based on that info the broker did all the leg work and came back with a product that suited us and that we are happy with.

Best of all they are free! Just make sure to ask what commission etc they get from different lending institutions to make sure they are promoting the best loan for you rather than the one that pays them the most commission.

Our broker actually disclosed all that information without us having to ask.

 

[SupaRex]

Personally, I've dealt with the banks directly in the past. Mostly because I had a friend of the family up the pointy end of a bank.

Since then, he has moved on, and I've personally talked to PT Bear about my "next move". I haven't organised a loan using PT Bear's services yet (because I haven't applied for another loan yet), but I can't recommend him highly enough. He was patient with my questions and gave me helpful advice which was of no benefit to him, but good for me.

I suggest you give him a call. I will be the next time I'm ready to "go around". Of course I'm sure there are plenty of other good brokers on here too. If you think about it, dodgy brokers would soon get exposed on here by the "experts" (which I am most certainly NOT!).

HTH,
SupaRex

 

[Jamie M]

Best of all they are free!

Some are starting to operate on a fee for service model - talk in the industry is that this will become more prevalent.

Just make sure to ask what commission etc they get from different lending institutions to make sure they are promoting the best loan for you rather than the one that pays them the most commission.

This should be provided by the broker upfront. For what it's worth - there isn't that much disparity between most lenders when it comes to the commissions they pay.

Cheers

Jamie

 

[StuartW]

Here's a selfish sugestion...

Spend $30 to buy my book (2nd edition arrives from the printers this week) - I think it goes a long way to describe why you need a credit advisor - not a bank staff member that's ready to take your order.

The added plus is I'm donating 100% of royalties to charity so you'll be helping.

http://majorstreet.com.au/smart-borrower-s-handbook/

 

[Rolf Latham]

Hi

Gernerically, I recommend a small broker that does all their own work, and approves the loans as well, and someone that will sit with you face to face. Maybe a mortgage manager.

The comfort level in your post demands that you have face to face contact and many brokers will do that.

Maybe your local Mortgage Choice Franchise

Unfortunately its not possible for only one person to touch a file, with a bank , non bank or lender or even a bank directly

Many brokers use Staff, many brokers outsource the application process and indeed, once a file leaves the brokers hands it does need to go through on average, 2 to 4 other hands and heads.

Unfortunately,if you want to borrow money, the folks lending it are the ones taking the risk, and they will want to know a little about the borrower.

ta
rolf

 

[jonmardell]

i think it is fair to say that people have had both positive and negative experiences with banks/brokers. My suggestion is call a few places and ask questions and see if you are comfortable with who you are dealing with and their experience.