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A recent CoreLogic Study states that Mortgage Brokers settled 59% of all residential homes during June 2021. Here’s a quick look at why an increasing number of property buyers are choosing to go with mortgage brokers.
What is a Mortgage Broker?
A mortgage broker is a property loan expert who has access to multiple lenders and acts as a matchmaker between a borrower and a lender. A broker receives a commission from the lender on the settlement of a loan. A broker is required to act in the best interest of a client and can incur fines of over $1 million in case of a breach.
How is going to a direct lender different?
A borrower can also go directly to a lender. However, going to a lender means that as a borrower, you have access to only what that lender offers. With over 5000 lenders in the Australian home-loan market, visiting lenders individually could be very limiting in terms of scoping the mortgage landscape to identify the best match for your specific needs.
Benefits of a Mortgage Broker
- Broader Product Range: Mortgage brokers have access to a panel of no less than 20 to 30 lenders with an array of 1000 to 2000 products. The range of products available to you is therefore far broader than a restricted lender specific portfolio.
- Better Product Match: Mortgage brokers usually work with a diverse range of borrower needs. This includes someone with an impeccable credit record looking for the most competitive rates, a self-employed person or a small business owner exploring minimal property deposit options. This know-how, backed by access to a far robust product array, significantly improves your chances of identifying a better product fit.
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- Credit Score: Credit score is a critical parameter in securing a home loan. A credit check run by a lender gets recorded as an enquiry in a borrower’s credit file. Multiple enquiries could adversely impact your score. On the other hand, checks run by mortgage brokers do not get recorded as an enquiry and therefore leave no footprint. So, if you are doing some research and exploring your options, using a broker will ensure that there is no impact on your credit score.
- Convenience: In addition to accessing multiple products at one single point, mortgage brokers are also a lot more flexible in terms of work timings. While in the case of a direct lender, you are restricted to the lender’s office timings and location, with a broker you could request a meeting after work hours at a location convenient to you.
- Usually free: As mentioned earlier, a mortgage broker earns a commission from the lender for every loan settled and generally charges clients no fees. Some rare exceptions include very complex application processes or loan amounts less than $200,000.
The information is a compilation from various sources for your benefit and should not be relied upon in lieu of appropriate professional advice.