In recent times there has been much confusion about the role of Mortgage Brokers, and in particular what they do beyond working with clients to get applications for Property Finance approved. This is especially the case after the Royal Commission into banking, finance, and insurance saw several witnesses make claims that mortgage brokers did nothing else but take applications.
In this article, we unveil exactly what mortgage brokers do and the extra value they provide which many people don’t seem to be able to acquire via a bank alone.
The right lender and loan for the right client
One of the best things about using the services of a mortgage broker is that they are focused on a lot more than just simply setting you up with a loan. Their business is founded upon being able to establish and maintain long-standing relationships with their clients. Their success is linked to the quality of the long-term relationships they build with clients over a lifetime.
Mortgage brokers have a range of different types of clients including; first home buyers, first-time property investors, and portfolio property investors – just to name a few. A successful mortgage broker may see clients who are all of these types of clients over a lifetime of dealing with property finance.
This means mortgage brokers have to be across a wide variety of needs from an array of different clients. They must understand the property market as well as all of the different types of loans available and how they can work best for clients who have varying needs.
Hamish Ferguson is a seasoned Mortgage Broker with Vision Property & Finance in Newcastle. He says brokers need to be aware of the trends occurring in the property market so they can give clients the best value experience possible.
“It’s not enough just to be able to explain the different types of property loans available; you need to understand the property market and the goals clients have so you have a good idea of what they want and can demonstrate how they can do it.”
“Property loans come in many different types. Not all are suitable for every kind of application our client intends to use them for. A loan for a first home buyer, for example, won’t do the same kind of job for a property investor. To optimise the outcome and client experience, mortgage brokers will need to be aware of precisely what clients want to achieve. Are they buying their first home? Or is it a first-time property investment loan? Every client is different when it comes to their property finance needs.”
Getting it right is worth thousands
Many of us have had the experience of going to an expert but finding out they are in fact no more than just salespeople. Good advice is invaluable but when it comes to property finance it can literally be worth thousands of dollars.
Good mortgage brokers are much more than simply experts in how to fill out loan applications. Hamish says that part of the value in seeking advice from an expert mortgage broker is that you can avoid mistakes that can cost you thousands and set you back from reaching your financial goals.
“I have had clients come to me after receiving really poor advice elsewhere. In one case, a client had been sold mortgage insurance that had cost over $10,000. Yet the client had a vast amount of equity and likely didn’t need to be spending this amount of money on a product they didn’t need. Good Mortgage Brokers will usually have an awareness of these kinds of issues and will be looking out for what best serves their clients.”
Collaborating with other finance professionals
When it comes to giving advice, mortgage brokers have a wealth of expertise to draw on but they are legally prevented from dispensing advice which is more commonly associated with financial planners or financial advisors.
Although Hamish is also a highly experienced financial adviser, he often deals with clients’ accountants and their own financial planners.
“We help clients who come to us for property loans but also need us to work with their own financial advisors or financial planners as part of their strategy to reach their financial goals.”
“This might include giving information to clients’ tax accountants or investment advisers. We can also advise clients on matters like, the correct loan for property investment, and choosing the right kind of loan depending on whether a client is fixing part or all of their mortgage’s interest rate. This sometimes involves communicating with clients’ trusted advisers and other finance industry professionals.”
Educating the borrower
Hamish said there is a real need for mortgage brokers to be proactive with their clients. This includes helping clients become more informed and aware after the initial contact.
“This can mean a mortgage broker is helping to educate the client on not only areas relating to the right mortgage for their needs but also on things like, how best to save for a home loan deposit or how to get all the information ready and accessible for a successful application.”
“It’s a process that is a lot more involved than just ticking a series of boxes on an application form. The advice and financial education we help to provide to clients lasts a lifetime.”
Hamish said that clients often leave with not only a home loan but lifelong skills in things like how to manage a household budget and planning and saving for the future. This helps to set clients up for a better overall financial future.
Value in keeping in touch with your mortgage broker
Recently, we covered the importance of keeping in touch with our clients, and why we do this on a regular basis. Peter and Ewan discussed how they regularly contact Vision’s clients, adding value beyond the process of successfully applying for a property loan.
Peter and Ewan recommended clients ask questions or bring any concerns or queries to the conversation so Vision can follow up and provide further advice.
One of the little knowing complexities around helping clients with their property loans beyond settlement is that your broker will require your authority to help make inquiries on your behalf. Hamish says this is due to the privacy laws which regulate the industry and protect consumers. Often, we need up to date balances and what interest rates you are paying. Lenders generally won’t give us this information so if we are to help our clients maintain competitive rates gathering this information on a regular basis is essential.
“It’s a common misconception that your mortgage broker will have access to your loan statements and records with any of our loan providers.”
“Recently we helped a client secure a rate reduction from their existing loan provider. The client had mentioned that they were very happy we were able to secure a financial windfall for them, however, they had expected we would already know their financial position with regards to their loan and would have anticipated their needs, and would have just organised this anyway.”
“We recommend keeping in regular contact with your broker and requesting they perform regular checks on your behalf so an opportunity is never missed to make sure you always have the right loan for your needs. Your broker will always need your authority and identification to supply to your loan provider upon requesting statement updates and other information. By law we don’t keep this information, so we’ll need it in future to follow up with your loan provider.”
Over the lifetime of a property loan the regular contact with your mortgage broker and the loan check-ups they can perform for you can potentially save you thousands of dollars. Your needs may vary over time, so staying in regular contact with your broker can also help to ensure you have the right loan for your needs.
Are you looking for extra value from your property loan?
Contact a Vision Property & Finance Mortgage Broker now to get the best advice and the right property loan for your needs. Give us a call on 02 8354 3000 to reach Sydney’s office or 02 4014 1999 to talk to someone in Newcastle’s office. You can also contact us here.