4 Reasons To Use A Mortgage Broker When You Buy Your First Home

April 22, 2024

Key takeaways:

  • Zero Cost to You: Mortgage brokers provide their services free to homebuyers.
  • Time-Saving Expertise: Mortgage brokers not only expedite the loan application process but also save you time on research and negotiations.
  • Acting in Your Best Interest: Mortgage brokers operate under a statutory obligation known as Best Interest Duty. This ensures they prioritise your needs and circumstances over everything else.

Are you a first time home buyer looking for home financing options and considering if you need to engage a mortgage broker?

Today, we’ll be sharing with you 4 reasons why you should engage a mortgage broker like Soho Home Loans.

1. It’s a Free Service

Did you know that brokers work for you but get paid by the lenders? It’s a common misconception for first home buyers to think that they will be paying mortgage brokers.

Mortgage brokers actually get paid by the lenders and this comes in the form of a commission. The mortgage broking industry has a straightforward revenue model. Lenders pay brokers an amount upon settlement which is usually about 0.6% of the loan value.

Here’s an example:

An $800,000 mortgage with a 0.6% commission would see a broker get paid $4800 for successful loan application. Furthermore, lenders may also pay brokers an annual fee if the borrower remains a customer of the lender.

This commission based model works well because it provides brokers with an incentive when they connect a lender with a borrower and it allows borrowers to enjoy the services of the broker without paying a single cent.

2. Saves you time

One of the main reasons people engage mortgage brokers is because it brings plenty of convenience when it comes to time.

If you are looking to find the best mortgage deal in a short period of time or to get an application approved from mortgage lenders faster, mortgage brokers are the best people you can turn to for help.

This is largely due to the fact that they have established a reputation and good working relationships with the lenders.

Borrowers with no prior knowledge would take a long time to research about the different lenders such as banks and private lenders. They would also have to read up about their eligibility and the application process.

However, if you have a mortgage broker, you will be able to let them know about your current financial status and they will be able to recommend an appropriate plan based on your situation.

Furthermore, being a mortgage broker would mean that they are familiar with the application process and the know-how of submitting a successful application. This expedites your loan application process and helps you can get your loan approved faster.

Saving time is extremely important when it comes to buying a property. Especially in times when there is a surge in demand for property, saving time helps you get ahead of the competition and get you the home you want.

3. Mortgage brokers find you the best deals

Being a mortgage broker goes beyond simply connecting borrowers to lenders. Did you know that mortgage brokers are bound under statutory obligation known as Best Interest Duty?

This means that brokers have to act in the best interest of you, the borrowers.

For example, the borrower may insist on an interest-only loan even when it is not in their best interest. The mortgage broker would then seek to make an effort to explain the reasons why the borrower should not get an interest-only loan and help the borrower make an informed decision.

Getting the best deal isn’t always about the lowest interest rate. It depends on one’s financial circumstances and this is where mortgage brokers shine. Being able to help thousands of clients purchase their dream property yearly, they know mortgage loans like the back of their hand.

They may even recommend specific features that you might not know about, but could help you with servicing your mortgages. As mentioned previously, they have good working relationships with many of the banks and lenders and this allows them to have access to more features and special rates.

In fact, based on a survey by ASIC in 2019 on mortgage experiences, 42% of the respondents who engaged mortgage brokers felt that brokers got them the best home loans.

4. They are knowledgable experts

soho home loans mortgage broker

The duty of mortgage brokers does not simply end when they connect you with lenders. They do more than just help you secure your initial home loan.

When it comes to reviewing the health of your home loan, they are the perfect person to consult with when you are evaluating whether there is a need to refinance your home loan.

It is always helpful to get the expert opinion of your mortgage broker as it instills confidence that you’re making the right financial decision, which will save you a lot of money when it comes to financing your home. They can also be your confidant when you’re looking for your next property.

In summary, brokers are great not only to guide you with your first property purchase, they will also be there for the long haul to advice you on important financial decisions when the time comes.

Hence, you should think of it as a long term partnership that you’re able to get free of charge. Most importantly, they are there first and foremost to help you save the legwork when you look for home loans.

If you’re still looking for a home loan, Soho Home Loans can help you by connecting you with our experienced mortgage brokers. It’s as easy as clicking here to fill in some basic details and our dedicated brokers will reach out to you through a phone call at your convenience.

FAQs on reasons to use a mortgage broker when buying a home

Should I see a mortgage broker before buying a house?

Brokers have access to a wider range of lenders than you might find on your own, including banks and non-bank lenders. This can significantly increase your chances of securing a loan with a competitive interest rate and terms that suit your financial situation.

Should you always use a mortgage broker?

Applying for a mortgage can involve a lot of paperwork and navigating different lenders’ requirements. A broker can handle much of this for you, saving you time and frustration.

Should I get a mortgage broker or do it myself?

The home loan market can be complex, with various loan types and features to consider. A broker can explain your options, answer your questions, and recommend the most suitable loan for your needs.

When should you engage a mortgage broker?

Using a broker isn’t mandatory, but it’s advisable in several situations:

  • First-time buyer: If you’re unfamiliar with the home loan process, a broker’s expertise can be invaluable.
  • Complex financial situation: If you have self-employment income, multiple debts, or a lower credit score, a broker can help you find lenders who cater to your circumstances.
  • Looking for a specific loan type: Whether you’re interested in a fixed-rate loan, a construction loan, or a guarantor loan, a broker can find lenders offering these specialised products.

Ultimately, the decision is yours. If you’re comfortable researching lenders, comparing rates, and navigating the application process yourself, you can go it alone.

But for most people, the advantages a mortgage broker brings to the table make them a worthwhile asset in securing the best home loan for your Australian property purchase.

Soho is your expert team in Australian real estate, offering an innovative platform for effortless property searches. With deep insights into buying, renting, and market trends, we guide you to make informed decisions, whether it's your first home or exploring new suburbs.
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Our AI match engine will match you with over 150,000+ properties and you can swipe away or shortlist easily. Making your home buying journey faster and easier.