Buying a home is a significant investment that can be both exciting and overwhelming, particularly when it comes to securing a mortgage. While many homebuyers rely on banks for financing, working with a mortgage broker can provide unique advantages that borrowers may not be aware of. Mortgage brokers have expert knowledge of the industry and often have preferential relationships and rates that can help borrowers navigate the mortgage process and secure the best possible loan for their needs. In this article, we’ll explore some of the top insider tips that banks may not disclose, and how these tips can help you make informed decisions when it comes to securing a mortgage.
Know the Lenders’ Policy Changes
Banks are constantly changing their lending criteria and interest rates, and as a mortgage broker, it’s my job to stay on top of these changes for my clients. I keep an eye on the latest mortgage policy updates from the banks, and inform my clients so they get the latest and best deals. This can help clients avoid wasting time and effort on loan applications that may be rejected due to a recent policy change they would have had no idea about.
Negotiate Better Interest Rates
Banks won’t tell you that they’re willing to negotiate on interest rates, but as a mortgage broker, I can often secure better rates for you by leveraging my relationships with the lenders. I’m never afraid to ask for a better rate on my clients’ behalf (this is exactly why you should be using a broker) and I help to paint a picture for the bank of how my clients are good candidates for a lower interest rate. Being able to secure a lower rate often saves my clients hundreds of thousands of dollars over the life of the loan. For example of the LVR is below 60% and the loan amount is over $1mil, this gives us more leverage to get a lower rate than what’s been advertised. I usually get the interest rate discount approved before puting an application in for my clients so they know what they’re getting upfront.
Look Beyond the Big Four Banks
The big four banks in Australia (ANZ, Commonwealth Bank, NAB, and Westpac) are often the first place that homebuyers look for a mortgage, but they may not be the best option for everyone. As a mortgage broker, I have access to a wide range of lenders, including smaller, specialised lenders that may offer better rates and loan products for certain types of borrowers. I ensure to offer my clients options from alternative lenders and explore all of the options available to them. Some of the smaller banks sometimes have lower annual fees and lower interest rates than the big four.
Don’t Underestimate the Importance of Credit Scores
Your credit scores play a big role in the loan approval process, and many banks won’t take the time to explain the importance of maintaining a good credit score. My passion as a broker goes beyond simply processing loans; I also understand the impact that your credit score has on the loan approval process, and offer tips for my clients on how to improve their score if necessary. This could include paying down debt, disputing errors on their credit report, and making payments on time. These small, but significant things, can be such a game changer when you’re applying for loans. I can even introduce my clients to a credit repair agency if necessary before a loan application is started.
Consider a Loan Package
Banks often offer loan packages that include a range of financial products, such as a home loan, credit card and personal loan directly to customers. But, these packages can be a great way for you to save money on interest and fees. So, the benefit of working with a broker is that we can weigh the pros and cons of these packages and help you to make an informed decision based on your specific financial situation. Sometimes paying an annual fee with a higher discount can be cheaper than a basic/no frills loan that has no annual fee as the discount isn’t as much therefore the rate is higher than a package loan.
Be Transparent About Fees and Commissions
Banks won’t always be upfront about the fees and commissions associated with a home loan, plus there is always a lot of jargon that most clients struggle to understand what it means to them and their situation. My #1 job as a broker is to help my clients understand any fees and commissions that they will be responsible for and be transparent about any fees that I earn as a broker (the fees brokers earn generally comes directly from the bank or lender, not the customer). They pay this to the broker as they don’t have the cost of marketing, sales, and preparing all the paperwork for the loan application.
Don’t Rush the Loan Approval Process
Rushing the loan approval process is a common mistake that many homebuyers make, but it can lead to long-term negative financial consequences. The stress can be high when property is in demand and if you don’t move fast you might miss out on your dream home. But, simply by taking the time to review options with my clients, helping them to understand the terms of the mortgage and answer any questions (that the bank often doesn’t have time to do), I can help to secure the best possible loan for your needs as well as avoiding costly mistakes.
I hope you enjoyed these insider tips and wish you well on your home buying journey.
If you’d like to have my guidance and support in navigating your mortgage, book a free call with me here.