With massive marketing budgets the banks have tried to convince people that the person at the counter can offer the same advice as a mortgage brokers and because the banks have to pay the broker, of course the banks can offer better mortgage rates too.
Of course this is not true!
The reality is most bank staff have limited ability to get you a better deal and their skills are generally limited to just their their own bank products. This makes it difficult to offer the best deals and best advice.
When people understand how mortgage brokers operate they may understand why a good mortgage broker can offer so much more than someone working at the bank can.
The key is to find a mortgage broker that you feel comfortable that you can work with.
We joined Mortgage Link in 2004 and trade under the brand of Mortgage Link Auckland. Of course there are many ‘brands’ in the financial services market and generally people deal with people (not brands) so it is the broker that you deal with first and foremost but it is nice to know that the broker is supported by staff and ultimately respected by the lenders.
Stuart Wemyss is a mortgage broker in Australia and has a vision for mortgage brokers. He operates a blog called the Mortgage Brokers Revolution and see a bigger roles for good mortgage brokers in Australia but no doubt the same applies to New Zealand.
Let’s try to explain some of the key benefits of using a mortgage broker.
Every Situation Is Different
Everyone will have a different financial situation.
Most people have little interest in mortgages unless they are actively looking at getting a mortgage when the most common question is what is going to happen to the mortgage interest rates. They are far more interested in the new home they are about to move into.
People who are about to commit to their largest financial commitment (the home loan) should take more care to ensure that they get it right, but they often are not even aware of the differences between the banks and the various home loans they offer.
New Zealand Is Adopting Mortgage Brokers Now
In past years if you wanted to get a home loan you would go to the bank and speak to your personal banker or branch manager who had the ability to make the lending decisions at the branch where you operated your accounts.
Many of the senior staff had been working at the bank for years and therefore over time got to know you and your financial situation. As a bank customer you felt valued and for that reason would rarely consider changing banks.
Over the year as banks changed and became more like any other business (with budgets and financial targets) the staff needed to adapt to the new environment with less personal responsibility and thus meaning the long term banking relationships no longer existed with the lending decisions shifted to head office.
This provided the perfect opportunity for mortgage brokers to come into the market, as they fulfilled a need.
People could then build a long term relationship with a mortgage broker instead of a bank with the added bonus that a good mortgage broker had access a choice of banks and lenders.
Best of all the service the brokers offered was free because the banks and other non-bank lenders paid the brokers a commission, but the broker worked for you and would negotiate a very good package on your behalf.
Mortgage Brokers Can Save You Money
Logic would suggest that leaving out the middleman and dealing directly with the bank would allow for a less expensive transaction and this is often what bank staff will tell you. Mortgage brokers are generally paid by the banks for doing the work that otherwise the bank would be paying a staff member to do, so there is no added cost and in many cases the banks will save money as they only pay the broker for the loans that actually are approved and proceed.
Of course if mortgage brokers didn’t save more than enough to offset their expense, they wouldn’t exist.
Two ways the right adviser can help;
- A mortgage broker should know which banks or other lenders would accept your application and then negotiate the best deal for you. This saves you both time and money.
- A good adviser will work with you to ensure the loans are structured to suit and so you can pay your mortgages off faster – this again saves you money.
People often say a mortgage broker’s job finishes when you get the mortgage but this is where a good adviser can make all the difference – they will be at your service to help you to pay off your home loan too.
Do You Think People Should Use A Mortgage Adviser?
Of course the answer is “YES” and for some of the reasons we have addressed.
Please share the knowledge you have learned today or better still you can share this article with your friends, family, social media followers and associates.
This is an easy way to help those people who really do need to find a good mortgage broker to help them.
