Most mortgage brokers are accredited and trained to discuss with you the features and costs of a number of mortgage facilities and their aim is to help you select the most suitable loan product for your purposes.
A good mortgage broker does not focus on his commission when recommending a loan product but rather will determine from your stated priorities which mortgage would best suit your needs. The reality is that some mortgage brokers will recommend you consolidate your debt when to do so may not in fact be in your best interests. If you are unhappy with your existing lender and seek the services of a mortgage broker to find you an alternative lender before outlaying any fees (e.g. application fees, valuation fees) make sure you check whether
1. your existing lender is able to reduce its rate at all
and if not, and you do repay your loan early…
2. what are the exit costs that will apply. There has been some controversy recently about the amount of some early repayment fees but as a general rule these in fact reflect the set up costs incurred when your loan is first settled. In most cases if you have been with a lender for 5 years there is unlikely to be any early repayment fees as by this stage the lender has recouped set up costs. If however you choose to refinance your mortgage after say 18 months then your lender is most likely still out-of-pocket and will be wanting to recoup costs. These exit costs should be factored into the new refinance deal when you calculate the real cost of the refinance. It could be that any improvement in your interest rate is negated by the exit costs – and if you do the numbers it could work out that it will take some 3 years before you are in fact in a better position.
3. that once you have refinanced you are in a better financial situation.
A good mortgage broker will go through these numbers with you and if it is not a viable proposition to refinance he will advise you accordingly.
Another interesting development in the mortgage broking arena is the community approach of some mortgage brokers. In many instances you will find that a mortgage broker is giving back to the community by aligning himself with charitable organisations such as CANTEEN. Under these types of arrangements you as a borrower can get the same interest rate as you would if you walked through the door of any of the major banks (as well as many other lenders) but instead of the bank taking all the profit on your mortgage, a percentage earned is distributed to CANTEEN (or other charitable organisations). This is a great way to have your mortgage working for the community at no extra cost to you.
So, when selecting a mortgage broker to help with a new loan or to refinance your existing mortgage make sure you choose one that you genuinely feel has your interests, and perhaps the interests of those in need within the community, top of mind.
Vicky Edema has been the Managing Director of Austral Mortgage Corporation since 1992, the company offers a
mortgage broker service which provides borrowers with
access to an expanded offering of loan and lease products.
Austral URL: http://www.australmortgage.com.au
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