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WHY USE A MORTGAGE BROKER TO NEGOTIATE YOUR HOME LOAN?

What exactly is a mortgage broker and why would you use one when applying for your home loan instead of going directly to the bank?

A mortgage broker is someone who acts on your behalf when talking to banks and other financial institutions. They are the conduit between someone seeking a home loan and the potential lenders. After the earthquake events of 2010, 2011 and 2016 it is important then ever to get that extra assistance when purchasing in Christchurch and other parts of the South Island.

Traditionally banks and other lending institutions sold and processed their own products. Mortgage brokers first came to the fore in the United States about 30 years ago and in New Zealand in the early 1990’s. Indeed, such has been the expansion of the broker market that mortgage brokers are now the largest sellers of home loan products for lenders in New Zealand, accounting for about half of all home loans processed.

In New Zealand mortgage brokers are almost exclusively paid by the banks. This means our services to you are free. You should be careful to check this with your mortgage broker at the outset however, as some brokers do charge for certain aspects of their advice. However, as mentioned above, our mortgage broker’s service to you is a free service.

If you are thinking that you must surely be able to get a better deal by going direct to the bank then you should think again. In most cases we will be able to negotiate an equal or better deal than by going directly to a lender. One of the most important parts of a mortgage is the loan structure, get this right and it can save thousands of dollars. By using Advanced Mortgage Solutions we can ensure the loan structure we come up with helps and supports your needs, essentially tailor making a loan structure for you.

Mortgage brokers certainly serve a valuable purpose in New Zealand and are here to stay. If you go direct to a bank then you will be offered one range of lending products available through that lender whereas, if you negotiate your home loan through a mortgage broker you will have access to most of the home lending options available.

Over the past twenty years there have been times when a major bank in New Zealand has not dealt with mortgage brokers for a period of time. However, now days the vast majority of lenders and financial institutions in New Zealand deal with mortgage brokers. We are supported by all of the major players in New Zealand and have access to other lenders that you may not of heard of before.

An experienced mortgage broker will be thoroughly familiar with all of the banks’ lending criteria including such factors as debt servicing criteria, loan to valuation ratio’s and the like.  Because your mortgage broker will be fully aware of each of the banks’ criteria you will usually find that they will only submit a deal to a particular bank if they are pretty much certain the loan will be approved.

Due to changes in the way a Credit Check effects your credit score, it is important not to go around too many lenders asking for finance. Although outwardly this seems like a good idea (so you can play them off each other), it actually effects your credit score in a negative way and can harm your ability to secure finance.

In packaging your loan a skilled mortgage broker will also work with you to review your financial situation, and if the opportunity exists, help you to restructure expensive debt such as credit cards, overdraft debt, hire purchases, and car loans. You can literally save hundreds of dollars a month by adding sufficient funds to your home loans to clear this type of debt. There needs to be some equity in your existing home to consolidate this kind of debt, however the results can be quite amazing when looking at the new repayment figures.

Similarly, if you are buying a business or an investment property or transferring a former family home to a rental, an experienced mortgage broker will help you structure your borrowing so that as much as much of the debt as possible can be deductible for tax purposes. A skilled broker will also know the best sources of finance for start-up businesses or franchise funding where there is no business history to display to the lender.

In order to be a member a mortgage broker must have completed and pass a number of exams, once passed you then need to be accredited through the lenders before you can use their products. Here at Advanced mortgage Solutions we are fully qualified and have access to all the lenders in New Zealand that have broker connections. As Registered Financial Advisers we are able to approach and negotiate with the lenders on your behalf.

If all else fails with the major lenders, perhaps because you have a poor credit rating but you simply must find finance, your mortgage broker will often also have recourse to second and even third tier lenders. You need to be aware that with such lenders the cost of credit is usually significantly higher with high front end establishment fees and loan approval fees charged, not to mention considerably higher interest rates.

If you are looking for impartial advice, the best choices in home loan products, interest rates, advice on the mix of floating and fixed rate loans, loan terms, fixed rate terms and reconciliation of expensive second tier debt, there is no doubt that you will secure the best available solutions by engaging the services of an experienced mortgage broker.

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