10 Compelling Reasons Why You Need a Mortgage Broker
What is a mortgage broker?
A good mortgage broker works for you!!!! He or she works like a middleman between you and the bank. This allows you some very special benefits. They will assist you in getting all of your paperwork ready. They will also find the best possible loan for you in the market place. Be mindful though, not all brokers are the same. I have used a couple of different brokers, and their service can vary. I have found that some of the main stream brokers are owned by banks.
I’m sure these brokers will give you the best possible loan that they have on their system. However, they probably do not have the most competitive lenders on their books.
I use a completely independent broker. He has provided me with loans from lenders I had never heard of before. These loans were the most competitive in the market at the time. None of my loans are with the big 4.
Even if you are only thinking about investing, you should make an appointment with a broker. A good broker will give you options that will inspire you to achieve your goals. You may discover that your goals of buying your first house or investment property are closer than you think. Your broker will know how to arrange finances and the finer details of lending that can open the right doors for you.
The broker makes money from the bank – he will take a commission off your loan. So when you use a broker, it doesn’t cost you anything, but you reap all the benefits.
Some of the benefits are listed below.
1. Keep your credit rating in check.
One of the best benefits to using a broker is this one right here. Every time you apply for a loan or credit card it goes onto a database. This database is your credit history and it gives you a credit rating. If you apply for a loan, and the bank knocks it back for whatever reason, this goes onto your credit history, and is marked as a rejected loan. There are no other details offered on this database.
So when you apply for another loan with another bank, they see that you have been rejected for a loan, and then this will work against you. If your loan gets rejected again, your credit rating will drop significantly. This is BAD, very bad. Using a broker will prevent this from happening.
A good broker will gather all of your information and then find the best loan for you. They will make sure that before you submit your loan application, it has the best possible chance of being approved. The broker takes all appropriate measures to make sure your loan is not rejected. This is something the banks do not do.
Your broker will also be on hand to assist you if times get tough. If times get tough or you may be going through a struggle, a good broker will liaise with the bank to make arrangements so you can keep making acceptable payments.
2.Best available loan rate.
A good broker will have access to the best possible loan rates. My broker has introduced me to lending providers that I have never heard of. They are not the big banks, they are smaller online lending institutions. They offer cheaper loans, because they have lower overheads and they have no shops and less staff to pay. We are becoming more and more of an online society, so shifting our banking to an online platform is very handy. A good broker should be able to get you a loan cheaper than what the bank will offer you if you were to apply directly with them.
3.Up to date with current lending requirements.
Our broker is fully aware of all of the current requirements for lending. Whether it be for your first home or your fifth investment house, there is a whole list of lending red tape that has to be navigated through. Whenever the government releases their new budget, our broker is hard at work figuring out how to use the new budget to our advantage. If the banks have changed their lending policies, our broker is working out how to use it to our advantage.
The broker is your middleman to the bank. I have found that a good broker has a long standing relationship with the banks and has very effective lines of communication. If there is a problem or question that needs to be addressed, they know how to solve it. They know who to speak to and they know how to solve issues when they arise. There is no need to call the bank, and to be sitting on the phone for hours, being put on hold and passed around an office looking for the right person.
5.Protect multiple assets
A broker will help you get individual loans for multiple assets. If all of your mortgages are with one bank, the bank will cross-collateralize all of your properties. So if something happens financially with one house, they will sell another of your houses to make up the short fall – so you miss out twice. The bank do not care about getting the best possible price for your house – they just want their portion of the money back.
If you use five separate banks for five investment properties, you will create a “firewall” between your properties. If you can’t make payments on one property, the bank cannot sell another one of your properties to get their money back. Your assets are protected from the bank.
A good broker will understand and implement a lending strategy to go along with your investment strategy. For the everyday person like you and me, we do not have lots of money to play with. So, my broker implements a strategy to increase my borrowing capacity. This can be quite complex to explain here. But what I do know is this – my wife and I have been able to borrow money for five+ properties.
If we had gone with the regular banks, we would have only been in a position to borrow for three properties. There is more to borrowing money than just applying for a loan. Your broker should be able to navigate the banking system and lending requirements in such a way as to give you the best possible outcome.
7.Set up ongoing relationships between all stakeholders
When implementing an investment strategy that involves multiple properties, you need someone that can communicate with all the stakeholders.
My broker understands my investment strategy and works with my real estate agent. My accountant knows my broker and understands what is happening with my lending. And when it comes time to buy a new house, they all communicate together to get the right result. Investing is made easy.
8.Ongoing support that protects your interest
Investing in anything is going to create risk. Some investments are riskier than others. So if a problem
arises and it is not possible to make repayments on your loan, contact your broker first. Your broker should be able to work something out with the bank and create options for you until you regain control or find the best solution in the meantime.
Your broker should be able to navigate you through all of the tax requirements on your new house. You should not have any surprises – a good broker will have all this figured out for you.
10. Lending Expert.
A good broker is an expert in his field. When I need the best advise on banking and home loans, I speak to my broker. We are not an experts on banking or banks, so I let my broker advise me on the best possible solutions for my investing strategy. I simply do not have enough time to research banks and understand their loan packages to make it viable to me. I leave this to the experts.
Ever since my wife and I got serious about property investing and implementing an investment strategy,
we have engaged a broker that has assisted us in achieving our goals.
We met our broker at an investment seminar, and on good advice we used his services to buy our next house. I have also used his advice on structuring all our loans. This has been a great leap forward for our investment portfolio. For more information about property investing, click here. To learn more about an award winning broker click here.