Finance Brokers. Who? What? Where?
When we’re ready to build a new home, and need to borrow money to do it, finance and mortgage brokers become part of our lives. Understanding what they do and how they can help is really useful for whatever new home journey you’re on.
How great is this - getting help from a mortgage broker costs you nothing. Mortgage brokers are paid a commission by the lenders, the banks. It’s an unusual way to run a business, but a great one for all of us. So, you can speak freely to mortgage brokers and not worry about them charging like a wounded lawyer.
The best thing you can do for you and the brokers you speak to, is be prepared with a clear and well documented overview of your financial position and the budget plans for your new home. That way, the broker will be able to give you the most valuable advice from the start.
What a broker does
Every good broker’s first job is to get to know you and understand your new home ambitions. That means for now, and for the future. What you’d like to happen down the track, and what might happen, are really quite important right now as far as financial plans are concerned. Once your individual situation has been profiled, discussed and understood, the broker gets to work and will find the best financial products available in the market.
The broker will then present the options to you, run you through the pros and cons and fine print and help you make the best final decision. They’re also there to help you through the building or buying process in a more general sense, from pre-approval to settlement.
Plus, mortgage brokers will be able to negotiate with the lender, on your behalf, to get you a better deal. That often means negotiating lower interest rates and this can represent significant savings over time.
What’s wrong with a bank?
Well, nothing, it just comes down to variety. While your broker has the ability to look at all banks and financial institutions, a bank is limited to selling you their own products. A good broker can and will search far and wide for the best possible product, and the best product usually means the one that will cost you the least amount of money in the long term.
Variety means more choice, and more choice should mean a better performing financial product for your situation and your new home. So, a broker really does make perfect sense.
When to bring in the broker
The best time to bring in the broker is at the beginning. Yes, you’ll definitely be busy at the start of your new home journey, there’s no doubt about it. And, just like when you choose your builder, it pays to sit down and chat with some different brokers and find one you feel really good about.
When you start the conversation with a good broker early on, you’ll quickly get a good understanding of the home loan process, interest rates, and borrowing capacity. This is all excellent information to have when you start looking for your land and new home.