The mortgage industry is full of both individuals and companies helping people get access to financing for one of the most important, and biggest, investments they’ll make in their lives. This includes mortgage brokers, who may be one of your most trusted assets when securing your home loan.
If you’re unfamiliar with what mortgage brokers do, or how to find the best broker, there are some important questions to ask before starting the process of finding the best home loan broker in Sydney for you.
What is a home loan broker?
A home loan broker, or a mortgage broker, is a licensed financial professional who acts as a liaison on your behalf and deals with banks or other lenders to arrange your home loan. Mortgage brokers must act in your best interest when securing a loan for you.
If you’re seeking a home loan broker in Sydney, you’ll find yourself with plenty of options. While the best home loan brokers in Sydney will go above and beyond, you can expect to be provided with at least:
- An understanding of your home loan needs and goals.
- A laid-out plan of what you can afford to borrow.
- Multiple options to suit your situation.
- An explanation of how each loan works and what it costs (for example, interest rates, features and fees).
- A guided application for a loan and management of the process from initial application through to settlement.
Your mortgage broker will discuss your needs, qualifications and roadblocks with you. They will then perform a comparison of all home loans available to you and present you with your best options.
Brokers are unable to compare the entire market but have access to large panels of lenders whom they work with to arrange the most favourable loan conditions available based on your needs. They also continue to act as your representative throughout the application and closing process, streamlining communication with the lender.
A mortgage broker originates your loan application but works with other financial professionals who handle underwriting your loan conditions, scheduling a closing and ultimately funding a loan.
Is it better to go to a mortgage broker or bank?
Deciding whether working with a home loan broker in Sydney vs working directly with a bank is best for you will be unique to your wants and needs. Ultimately, working with a mortgage broker will offer you more flexibility on loans and more loan options to decide between.
Both mortgage brokers and direct lenders provide services to those seeking loans, but they are very different. A broker will work directly with you to identify the best lender for your situation, while a direct lender is a bank or financial institution that decides if you’re qualified for their pre-set loans and hands over the check.
A mortgage broker acts as an intermediary between the borrower and all the potential lenders in the market. Some lenders work only with mortgage brokers, so you may have access to loans otherwise unavailable to you if applying on your own.
When you work directly with a bank, the burden of research and comparison falls on you as the borrower.
You will likely have to perform hours of research to discover what lenders you’d like to apply to, take multiple meetings and fill out multiple applications which can directly affect your credit score. You will also have to keep track of the pros and cons of all loans offered to you and weigh the benefits without expert guidance.
Working with a home loan broker in Sydney can consolidate this process. A more streamlined loan application is certainly more convenient and less stressful than going direct to lenders, though you will be further removed and less hands-on from your home loan application process.
There are pros and cons to working with either a mortgage broker or a direct lender.
Mortgage Broker Pros
- Help with home loan prep and expert advice – Gathering all the documents needed to secure a home loan can be tedious and, at times, confusing. Mortgage brokers can answer all your questions about getting a home loan, help gather all the documents needed and provide the information you’ll need when the time comes to apply for a mortgage. The mortgage brokers at Finance 360 Degrees can provide expert advice on your application and home loan approval process.
- Better rates – While a direct lender can only provide you with loans that their financial institution currently offers, a mortgage broker can help you secure any type of home loan and often can negotiate more favourable loan terms on your behalf.
- Customised assistance – If you’re a first-time home buyer who qualifies for government schemes, a mortgage broker can help you identify how to navigate the first-time home buying process and secure the most accommodating loan. If you are a non-traditional applicant who would have a difficult time qualifying for a loan, for example, if you’re self-employed or have a small credit history, working with a mortgage broker can help you find lenders who are more amenable to your situation.
- Convenience and peace of mind – The process of researching and applying for a mortgage is an incredibly time-intensive process. After immense research, loan applications and closing processes can continue to be stressful and intense. Mortgage brokers handle the paperwork and requests from lenders on your behalf, saving you both time and stress.
Mortgage Broker Cons
- Commission – Mortgage brokers are often paid their fees or commissions directly by the lender, though they will occasionally charge you a fee directly in place of the lender’s fee.
- Longer timeline – Working with a mortgage broker can often take longer from start to finish than going directly to a lender, as mortgage brokers need time to assess your situation and converse with all available lenders.
Direct Lender Pros
- Direct connection – Working directly with a loan officer at a bank is more hands-on if you want to feel as involved as possible with your home buying process. By communicating directly with a loan officer, you are also cutting out the middleman, which can speed up the process. Any issues with your application can be addressed right away.
- Potential discounts – If you have an existing relationship with a bank, it may be to your advantage. Many banks offer discounts to existing customers who use other products or services like credit cards, checking or savings accounts. You may be able to negotiate a discount on closing costs or a waiver of an origination fee.
- Fewer fees – Mortgage brokers generally earn a flat fee equal to a small percentage of the total cost of the loan. If you pay this as the borrower, it may be part of your closing costs or rolled into the loan amount. Sometimes the lender will pay the mortgage broker an origination fee. Although that may seem less expensive than paying your broker directly after closing, your lender might build the broker’s fee into the cost of your loan.
Direct Lender Cons
- Individual applications – You must gather documents and complete applications for each lender you want to receive a quote from, which is time-consuming. Completing multiple applications in a short period can also directly affect your credit score.
- Fewer options – As you must apply to individual loan officers at each bank, you will likely have fewer options of loans to choose from in the end.
- Application approvals – Direct lenders have their own underwriting and loan terms. If there are problems with your application that they cannot overcome, then your loan application could be denied. If this happens, you’ll have to start a new application with a new lender.
How much do home loan brokers charge in Australia?
Home loan brokers in Sydney typically are paid fees by the lender you ultimately select. This means that brokers don't get paid unless your loan gets approved, which gives them a huge incentive to work hard on your behalf and help you gain home loan approval.
If your home loan broker is providing more services, such as financial planning, then they may charge additional fees. You can discuss additional services and pricing with your potential broker before agreeing to work together. As licensed finance professionals, brokers are obligated to provide you with disclosure documents if requested.
For home loan brokers in Sydney, there are 2 types of broker fees:
- Upfront commission. An upfront commission is a commission a mortgage broker receives for introducing the home loan customer to the lender. It is normally just below 1% of the loan value.
- Trail commission. This is a recurring commission that is calculated based on the remaining loan amount each year, which is paid to the broker monthly by the lender.
As a client of Finance 360 Degrees, loan brokers are paid commissions by the lender. You would not take on any upfront fees for utilising broker services provided by Finance 360 Degrees.
Is it worth using home loan brokers in Sydney?
If you are just beginning your home buying process, you are likely wondering if it’s worth utilising a home loan broker in Sydney. For the majority of home loan seekers, the answer is a resounding yes.
As working with a home loan broker at Finance 360 Degrees is of no cost to you as the borrower, you can only expect to receive positive additions to your home loan application process. Benefits you’ll receive include:
- Expert Advice
- Better Rates
- Peace of Mind
If not for convenience and guidance alone, the help of a home loan broker can secure you the best possible terms for your loan, costing you less in the long run.
How to Find the Best Home Loan Brokers in Sydney
As expert home loan brokers in Sydney, the brokers at Finance 360 degrees know what it takes for a good broker to be your best possible broker. Questions we recommend asking when meeting with your potential home loan broker for the first time include:
- Do you have an FBAA or MFAA professional membership?
- How many years have you been in the mortgage industry?
- Which lenders do you work with most regularly and why?
- Do you have any customer reviews?
- What do you do for your customers that other home loan brokers cannot?
- How many lenders did you use in the last 12 months? As a guide, a good mortgage broker would have used at least 8 lenders.
- What volume of home loans did you settle in the last 12 months? A top mortgage broker will settle over $40 million in home loans annually.
- What type of clients do you work with the most frequently?
- What are your areas of expertise?
- Are you familiar with my state legislation regarding incentives, special loans and grants?
- Are you interested in understanding my wealth creation and lifestyle goals so you know how to align my potential loan products to suit?
- How many investment portfolios have you financed?
- How responsive are you when it comes to communication? A good mortgage broker needs to be able to respond in minutes to push banks/solicitors to meet tight settlement deadlines.
As different home loan brokers may specialise or have experience working with borrowers who have specific portfolios, loan needs or loan barriers, it is also important to know what you’re looking for to pair with the best home loan broker in Sydney for you.
It is crucial to understand your loan requirements and needs before meeting with a home loan broker. These include:
- Whether or not you are a first-time home buyer
- If you have an excellent or unfortunate credit history
- The amount you have available for a down payment
- Other assets you may have in your possession
- Investment desire – certain types of loans or lending tactics, such as cross-collateralisation, are best avoided for some investors so that each asset can be borrowed against or sold without restriction
Finance 360 Degrees Home Loan Brokers
Finance 360 Degrees is home to some of the best home loan brokers in Sydney who can guide you to the most effective home loan for your needs.
If you’re concerned about your eligibility for home loans, our brokers are experts in getting tough home loans approved for first-time home buyers and those with unusual circumstances applying for mortgages.
Beginning your home loan journey with a Finance 360 Degrees home loan broker in Sydney can help you create future-proof finance strategies and remove barriers to financial growth today.