Do You Need a Mortgage Broker?

• 

  Ocker on 08/03/2018 - 18:42

  +1

  Just don't forget that mortgage brokers are like car salesmen and real estate agents - they are primarily interested in #1 (that aint you!)

  Check with at least 3 brokers.

• 

  graveyardsoul on 08/03/2018 - 19:06

  +1

  I work in Banking for last 12 years and been dealing with lending for last 8 years.
  1. Comparison Rate is just an indication - no banks use the exact same loan and term to display their comparison rate, one may use 150K 25 years and other may based it on 250K on 30 years term. Generally those with smallest difference between the actual advertised rate against the comparison rate is the better one.
  2. Auction is like a gamble - your property contract is unconditional and you are expected to meet the settlement term regardless of your finance situation and the price you agreed upon Auction time may not necessarily the price the bank will value, the rational is that you may be willing to pay more than market price to ensure you win the auction so always know the surrounding market value
  3. Any fix rate will attract penalty cost if you were to terminate the fix rate agreement generally it is unascertainable.
  4. You can always set your own term requirement when you refinance your loan in the future, it is a common practice that term is push back to 30 years so you can either borrow more or allow you to borrow enough to cover existing loan. Borrowing capacity changes when your income situation change and also bank tend to tighten their lending practice time to time like to reduce their lending exposure, just like what is currently happening. Yes, even though you refinance for another 30 years term, you have the flexibility to do additional repayment anytime (only works when you are discipline with your money)
  5. That broker should not be doing that unless he/she is also a licensed agent - I would approach another broker indeed.

  Broking industry is way way much more regulated compared to banks' own lending officer…good broker definitely worth your time and effort.

  • 

    dcep on 08/03/2018 - 20:57

    Does bank value the same between 2 apartments below ?
    Since they use autoval/corelogic which only caters for location & specs, while leaving out the apartment features totally.

    Same bed, same size, same location, same building.

    Apartment 1 :
    - north east facing sunrise
    - top level river view
    - full height glazing

    Apartment 2 :
    - facing south west
    - level 5 or below
    - window looking over wall of building beside
    - in shadow without any sunlight at all times

    • 

      graveyardsoul on 09/03/2018 - 20:57

      If the valuation was done as a Kerbside Valuation method, I don't think the specs you've mentioned will make any difference.

      This is why kerbside method is not the best way to value a property however it's the cheaper option for bank to do valuation hence it's becoming more common.

• 

  Woodinski on 08/03/2018 - 19:08

  Ones that are true:
  - Buying on auction there is a chance the bank might give a lower market value for my chosen property
  - If you take a fixed term loan usually there is exit fees if you still inside the fixed period.

  Ones that generally are not true:
  - Variable loan can be more expensive (generally not true, unless you can pick the bottom of the market, banks are generally better at guessing this than you so the variable rates / fixed rates reflect this)

  Lies:
  - Told me comparison rate is not really important.

  • 

    mskeggs on 08/03/2018 - 20:01

    +3

    I don’t think the comparison rate is important. If you are comparing two identical products like a variable loan over the same term for the same rate, it exposes the fees. But if you get a sweet fixed deal for the first few years, you can refinance at the end - yet the comparison rate will be almost totally calculated on the variable portion, which is likely to be irrelevant.
    I don’t think it is a substitute for calculating the actual fees and interest you will get hit with in your own circumstances.

• 

  dcep on 08/03/2018 - 20:46

  1) If your broker can't give you 'specials' discounted rates from standard bank advertised rate, just go fine another one.
  Else you can always go straight to bank like Suncorp/HSBC/Macquarie - all between 3.59 - 3.69 variable (standard advertised rates)

  2) Yes.

  3) No. See 1.

  4) Yes.

  5) Yes. No difference.

  6) Ask for shares of rebate / kickbacks.

• 

  TheBilly on 09/03/2018 - 00:28

  Best advice I ever got was. There are 3 big mortgage insurers in Australia. They call all the shots and effecticely dictate who gets what and when and there is no power with anyone else. You might think that "oh but I have an LVR of 80% so Im safe" nope you're not. Banks still pay mortgage insurance, it's just that below 80% they don't pass it to consumers as its marginal, so they still get dictated too.

  ANZ do their own mortgage insurance, which leaves 2 more. So effectively everyone else in the market gets dictated to by 2 major shot callers - 'mortgage insurers'. So if you ever get brokers saying, I can do this and that, come and utilise my services over somebody elses, be wary, as there effectiveness is limited by the mortgage insurer - of which there are only 2 anyway.

• 

  kiwijunglist on 09/03/2018 - 08:47

  I found mortgage broker could get similar deals to what I could get with hard bargaining, however it was less hassle to go with them. The second time I used one I actually bargained a better rate so they gave me a cash gift from their own commission to secure my business.

• 

  Bmann999 on 10/03/2018 - 20:12

  -2

  This is what I did…

  Went to CBA - dealt with their mortgage specialist. He was really helpful and did all the paperwork without me even needing to go into his office. After I purchased the house, I sent him an advertisement for HSBC's rate and he matched the rate (even though I wasn't seriously going to use them instead).

  I also went to a mortgage broker before pre-approval (on the advice of a friend). The guy was a total sleaze and offered me a rate .5% higher than what CBA offered me without even trying to negotiate. I also asked him a question about tax structures with an IP and his advice was effectively to lie to the ATO. Needless to say, I didn't use him.

  I have 2 friends who used brokers - they both pay higher interest rates then me and both had their applications held up needlessly because the broker was really lazy after they signed an agreement (They only care about selling). Big banks can also be sleezy, but at least they provide good service all the way through settlement. Remembers the brokers don't find you the best rate - they only work with banks who pay them commission.

• 

  Sofie519 on 15/05/2018 - 02:27

  Q: —-Told me comparison rate is not really important. Was recommending me a loan which is discounted @ 3.69% for first two years then 4.49% after the comparison was 5.1%. The lad said focus on the two years only and after that I can change lender to a better deal.
  A: Change Brokers, every time you refinance through that broker he/she earns upfront commission on your loan. this advice benefits the broker not you as the borrower. He/she basically trying to guarantee another payday in two years, as you WILL refinance considering not only can you get a better rate today, you are likely to be grossly overpaying in 2yrs time. Also everytime you refinance, you have to pay discharge, legal and setup costs, which negates most if not all savings. You dont see these costs, because the broker is likely to capitalise these costs into your loan (add it into your outstanding loan and borrow more)

  Q: However there was option with other lenders offering 3.69% comparison rate at variable rate.
  A: Comparison rates are like supermarket average pricing laws that force supermarkets to display how much 100g of tuna costs, even if you were buying a 50g or 500g tin. Comparison rates use $150K over 25yrs taking into account all upfront and ongoing fees associated with the loan. So if the rate is 4.49% and the comparison rate is 5.1%, you are paying .61% towards lenders fees instead of having the money go towards paying down the principle of the loan. Loans that have the closes advertised rate with its comparison rates, demonstrate a minimum in lender fees (could also mean a limit in facilities offered as well). So take into account your holistic situation and find the best loan for you now whilst expecting to keep that loan for the long term. Even if you dont keep the loan for 30yrs, you have factored in your best case scenario

  Q: Buying on auction there is a chance the bank might give a lower market value for my chosen property
  A: Yes and No, just depends on whether you overpaid for the property in light of the pressuring situation. A good broker will also challenge the valuation on your behalf.

  Q: Variable loan can be more expensive. Best to take those discounted two years which is fixed for 2 years and change after.
  A: Ridiculous! refer back to question 1. Only reason for you to FIX your loan is if you expect that interest rates will rise above the already higher rate you are paying with the next two years. Yes Fixed rates are generally more expensive than variable rate to protect the lender from downside loss. Discounted rates may be cheaper than Variable, but there is a certainty you will lose in fees.

  Q: If you take a fixed term loan usually there is exit fees if you still inside the fixed period.
  A: yes this is called Early Exit Fee, Early Break Costs etc, only applicable when you discharge during fixed period. Discharge fees are applicable to all loans, but consider early exit fees as a penalty, the lender is still entitled to get the interest you agreed to pay during the fixed term, give or take whatever formula is used in the loan contract.

  Q: Re-financing the loan would usually be calculated over 30yrs again so it will appear cheaper. You can change the duration. Asked if been 10 years and if I could refinance to another for 20 years answer was yes. But best to stay 30years and simply add more in my repayment.
  A: Refinancing over 30years reduces the amount needed to pay per month. This is called servicing, if your loan is over 10 years, consider you need to pay 3x the monthly repayment, which may mean you cant afford the loan. The loan term is always stretched to the maximum of 30yrs because it allows you to afford the loan. Of course even if your loan term is 30years, you can pay for it in 10 years, or win the lottery and pay it off tomorrow. But for the purpose of affordability, serviceability and ensure approval, stretching the loan term to the maximum is normal industry practice.

  Q: Of course trying to get me to buy one of his recommended off the plan as investment.
  A: Beware of buying off the plan in a downward market, even if you have a preapproval, when the development is complete, valuation is made then, and if valuation falls short, your loan can fall over.