What do mortgage brokers do? I’m Andrew Malcolm from mortgagehq and today, we’re going to have a quick chat about what a mortgage broker would do for you and what’s the difference between a mortgage adviser and a mortgage broker.
THIS IS A LIGHTLY EDITED TRANSCRIPTION OF THE VIDEO BELOW.
What is a mortgage broker?
A mortgage broker is going to help you secure the best offer in the market. Made up of negotiated interest rates, cashback incentives, and mortgage structure (product) options. They can help with both existing mortgages or new mortgages you’re looking at taking.
If you’ve already got a mortgage, that mortgage broker is going to help you assess whether it’s worth breaking to refix or refinance.
If you’re already floating or looking at a new purchase, the broker will help you assess, what each of the banks would offer you and whether it’s worth taking action and paying for legal fees, and valuations, if that’s what’s required to do the switch.
What is a mortgage adviser?
Now, a mortgage adviser is somebody that does all of the above but is also going to focus on the long term. Long term help always starts with identifying your goal. They’ll specifically ask, “Hey, what’s your goal?” Then offer to help you reach that goal.
Both words ‘adviser’ vs ‘broker’ describe the same profession, so if you are looking at someone who chose one description over the other – it probably signals the type of work they enjoy doing and how they will approach your situation.
How mortgage advisers actually help you achieve your goals
After helping you clarify and hopefully write down your goals the next thing a mortgage broker or mortgage adviser will help you with is assessing your current mortgage product options and the mortgage structure. This is the first piece to get correct before negotiating rates or purchasing a new property.
Mortgage advisers will assess or audit your current structure and rates
As an example, you’ve probably heard of revolving credit. It comes by different names at each of the different banks; offset facility, total money, Orbit, Flexi, there are lots of different names out there. A mortgage adviser is going to help you understand how to take advantage of this. They will present you with options on how to use those products to achieve your goals whilst taking into consideration your lifestyle and what suits you. Including helping you understand how to pay the mortgage off faster if that’s your goal or how to take advantage of the equity.
Mortgage advisers will unpack your borrowing power over multiple situations or scenarios
Your mortgage adviser is going to help you assess what borrowing power you’ve got and help you build up your property portfolio if that is your goal. And if there are any security swaps to be made or, you know, properties to be removed from your portfolio, the mortgage brokers help you understand which options you have and negotiate with the bank. So a mortgage broker does get paid commission from the banks.
What does it cost to work with a mortgage broker?
Usually, it’s a free service. There’s nominal fees attached sometimes where, you know, if there’s no payment for the mortgage adviser and they’re going to spend time on things, but what you got to remember is a mortgage adviser has access to all of the different lenders, you know, sometimes 10, 20, 30 different options, all of the main banks.
And when you’re dealing with just your bank, they don’t have access, and they can’t actually give you advice, and they can’t tell you about all the options at the different banks so a mortgage broker is going to help you understand those options. And yeah, they do have an incentive. They won’t get paid unless, you know, you get the result that you want so they’re going to see it through all the way to the end. And if something needs to be done at 9:00 at night, or on a Saturday or Sunday, the mortgage broker has this big incentive to get something done for you because, you know, that’s how they’re going to get paid.
How to choose a mortgage broker or mortgage adviser?
So mortgage broker, mortgage adviser, you know, call it what you want, different types of advisers and brokers in the market and most of the time, you’re going to get referred to someone or you find someone online. Just check out their reviews, check out whether they’ve got awards and they’ve got experience, and that should help you understand, you know, who you should talk to. And don’t be afraid to talk to two, three, four, five different brokers.
You can’t work with them at the same time but you can talk to them and understand, you know, the way that they would present your application, and the way they understand your situation, and what options they present to you. And then, once you’re set on a mortgage broker, should be a relationship that lasts many years, not just like when you call the bank and you don’t know who you’re going to get.
So don’t forget to subscribe and we’ll find out a lot more about what working with a mortgage broker entails and, you know, as mortgage brokers online, our ultimate goal is to focus on educating you and educating the market, and then that makes choosing which mortgage broker to work with is an easy decision. So how does it work when you work with a mortgage broker?
So the first step, maybe you’ve done an inquiry online. You’ve been on to a mortgage adviser’s website. You’ve sent like a little bit of information. Maybe you’ve emailed the broker. You’re going to get a phone call probably and somebody’s going to chat through what your situation is, understand what’s going on and what goals you’ve got. And they’re probably going to request more information. Now, the information that’s been requested is pretty stock standard.
Questions your adviser might ask you.
It’s basic things like name, property address, mortgage details, income expenses, things like that. What a mortgage adviser’s team is going to do is assess what’s your current situation and what options you’ve got. Do you have borrowing power? Do you have uncommitted monthly income? Can you separate a security? There’s a bunch of things that we want to look at, we want to assess before we connect you up with a mortgage adviser for a more structured recommendation call, so when you’re talking with that mortgage adviser, it’s not a question and answer scenario.
It’s more like, “Hey, I understand your goals. I understand your plans. Here’s some challenges that might be associated with your file and let’s make sure we get the timing all lined up.” And then if you are ready and the mortgage adviser and you as a client are in agreement, then we’re going to request documentation.
So we’re going to go through the documents, bank statements, payslips. If you’re self-employed, financials. If you’ve got rental properties, maybe some documents related to that. All this documentation is the same thing that the bank is going to ask for and what we’re going to do is collect all of it. And, you know, it should be the one time that we need to do it for that time period. And that way, if we go to one of the banks and it doesn’t work out, we can go to the other bank.
We’ve got everything that we need. So once we collate that information, review all of it, maybe in the mortgage advisers team, there’s a submissions or settlements specialist, they’re going to review everything and then they’re going to submit it to the bank. Now, sometimes, if it’s requiring a special banker like a business banker, maybe we’ll send it to that channel but otherwise, the way the banks work is there’s a broker channel and there’s a retail channel.
How mortgage brokers work with the banks
And they essentially compete against each other so when you are talking to your bank, whether it’s a private banker or you’re just dealing with someone in the branch, the broker unit at the bank is actually separate and they’re working kind of most of the time against the retail unit to compete for business. Sometimes, they work a little bit in conjunction but what you just need to understand is a mortgage adviser is working in partnership with the bank and they’re on your team.
The mortgage adviser, the banker, the client, everybody wants to get the deal done but only if there is a deal there and that’s based on responsible lending guidelines and based on the bank’s own servicing criteria. So once that application is submitted to the bank, the bank’s credit team and the bankers involved will assess and then either approve or decline.
And it’ll be declined with specific reasons that maybe that can be reworked later. And if it’s approved, there’ll be conditions. Most applications come back with a bunch of conditions attached to them and you’ve got to satisfy those conditions before you should and you can go unconditional and before you can settle the loan. And then, you know, there might be bank accounts that need to be open, if you’re new to a bank, and a bunch of steps to take before you can get that property locked up.
There’s a bunch of bankers working in the background to make sure everything goes as smoothly as it can. Not always a perfect process but once your mortgage is settled, everything should be set up online and you’ve got better access to all of those accounts. The mortgage adviser can’t see any of the bank statement stuff but the mortgage adviser can’t log in, and they, you know, the mortgage adviser doesn’t get paid any different based on what rates you get.
So it’s our job to negotiate the best deal for you on the best terms and then if you’ve got everyday banking things, you’ll talk to the bank about that. Now, that’s how a mortgage adviser works. When you go through the process, it’s similar to if you work with somebody in a branch but a mortgage adviser has access to all of the lenders, and sometimes, there are some shortcuts, like we know which banker to talk to.
We know which bank to talk to, you know, things like dependents, kids, types of income. All those things play a big factor in which bank we’ll choose for that specific client. And it’s basically impossible to tell if you’re not dealing with a high volume of mortgages every week because the service and criteria, the banks change all the time.