Sep 25

A mortgage broker named Mark

Published in mortgage brokerhome loan financehome financecheap home loan by Vicky Edema
A mortgage broker named Mark
Wrote home loans from dawn til dark
He would visit at home
Could arrange any loan
Was polite and bright as a spark!

But a mortgage broker named Dan
Was a devious and shifty man
If you went with his loan
You’d risked losing your home
Plus your family, your car and the can!

Yes, there is quite a difference between a dedicated and experienced mortgage broker and a mortgage broker who really has little product knowledge and even less ethics. It is very important when choosing a mortgage broker that you choose one you are comfortable with and who demonstrates sound industry and product knowledge. The fact is that over the past decade a mortgage broker has been has able to earn big money through commissions because in Australia we have had a long period of solid growth in real estate. For a mortgage broker it was easy to arrange a mortgage with just about any lender in town. Unfortunately many mortgage brokers were driven by the commission they were being paid by lenders as opposed to being mindful of the needs of their clients.

Before determining the terms and conditions of existing mortgage facilities that a client might hold they would encourage borrowers to refinance. The mortgage broker would have you fill out an application and pay an application fee without any intent of refunding it if you decided that the mortgage he arranged was not suitable for you. Furthermore, any mortgage broker worth his salt will want to determine what break costs or early exit fees you might incur if you terminate your existing home loan early. These break costs under a mortgage can be considerable particularly if you are in a fixed rate and you are seeking to exit the mortgage in the first few years. If interest rates have fallen you may find that to exit your loan is going to cost you a few thousand dollars or more.

A good mortgage broker will want to know what penalties apply if you do refinance. With this information the mortgage broker can ascertain whether it is really a viable proposition to refinance your loan. You may have quite a good fixed rate but the mortgage broker recommends you refinance into a lower variable rate. This may work for the short term but in the long term the mortgage broker is not doing you any favours. If interest rates rise then you have not only out -layed those exit costs – you are well and truly behind the eight ball with higher monthly instalments. Any mortgage broker that does not ask about the costs associated with exiting your existing home loan does not have your interests at heart. So often a borrower will outlay upfront fees and meet valuation costs and only then realise that the mortgage broker failed tom alert him to the exit costs. It simply becomes unviable to proceed but there is no scope to recover any fees paid to the mortgage broker because as far as he is concerned he has delivered a mortgage which you have accepted.

My advice – deal with someone with the characteristics of Mark the Mortgage Broker and you will be well looked after.
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