You have found the property you want and have locked an offer with the real estate agent or the seller himself. The next step now is to get financing. When finding a good loan, you are always presented with two options: hire a mortgage broker or go directly to bank. There are advantages and disadvantages to both. Read on to decide which option is best for you.
Going for a Mortgage Broker
Contrary to popular belief, you don’t pay mortgage brokers. It is the lender you loan from who will be paying your mortgage broker. Do not worry though; you will not have to pay more for your loan when you hire a mortgage broker. Banks and lenders make their money by loaning out money. The more good-standing loans they have, the better for their business, which is why they hire reputable mortgage brokers.
But would hiring a mortgage broker be advantageous to you? Let’s find out.
The Pros of Hiring a Mortgage Broker
The number of options they can provide.
A mortgage broker is linked with multiple banks and non-bank lenders. They can easily take a look at your needs and compare it with what they have and have a list of lenders that can work with you.
There is no need for you to understand multiple lenders policies.
Different institutions have different policies and rates. If you do it yourself, you would need to go from one lender to another and take note of all their policies. At the end of the day, you might already be confused of which lender has which policy.
They minimize the time and legwork of going from one lender to another.
As mentioned above, doing it yourself would mean visiting various lenders. You can’t do this in one day, not even in one week. What you can accomplish in one week, a mortgage lender can accomplish in just a couple of hours. Keep in mind that time is money. The longer it takes you to find the right lender, the less the property seller’s confidence in you would be, which might make him or her reconsider your deal.
They can offer the best deals.
With their experience in matching loan applicants to lenders, they will be able to provide you the best deal. The best deal is not always finding a loan at the lowest interest rate or the highest loanable amount; it means finding a lender whose terms would work best for you. It can be a bigger loan for a longer period at a monthly rate that you can easily pay, or a shorter period at a higher monthly payment that is still convenient for you but at a lower rate. It all depends on your financial capabilities. A good mortgage broker can help you assess what’s best for your financial status.
Chinese-speaking mortgage brokers can make everything easier for you.
If English is not your first language, you might find it difficult to talk to lenders. If you hardly speak English at all, then you would surely be in a tight-spot. Mortgage brokers realized this need to assist Chinese investors further so they studied Mandarin in order to properly communicate. Sometimes they would hire an interpreter without additional cost to you.
They can help you get certified translations of your financial documents.
Aside from communicating with you more efficiently, mortgage brokers also hire translators and interpreters who can provide a certificate of translation for your documents that are not written in English.
The Cons of Hiring a Mortgage Broker
Finding the right broker can be tough.
If it’s your first time in entering the real estate market in Australia, you might have trouble navigating through. We can offer you assistance in this aspect. Just contact us and we’ll match you with the right mortgage broker based on your needs.
If you have no background with real estate, you might not understand which is a good deal and which isn’t.
How do you know if what your mortgage broker is really offering you the best deal? If you trust that your broker will offer what’s best for you based on previous transactions, it would be easy. However, if you are working with him for the first time, trust can be a bit tough to come by.
Finding Chinese-speaking mortgage brokers are not easy.
Not all mortgage brokers speak Mandarin. Finding one can be difficult.
To understand more about what mortgage brokers do exactly and how to hire one, read our post on Specialised Mortgage Brokers.
Going Directly to the Bank or Lender
You always have an option to talk to lenders yourself. Lenders can be banks or non-banks. Non-banks usually offer higher interest rate at lower LVR as they are typically a borrower’s option if obtaining a loan from Australian banks is not easy or possible.
Each lending company would usually have a representative who will discuss loan terms with you. For instance, a bank will have a bank loan officer. This person receives incentives for every loan they get approved, similar to how a mortgage broker earns. The difference between the two is that a bank loan officer works for only one company.
The Pros of Going Direct to Bank
Any information you need from the bank, you can get first-hand.
You don’t need to worry about whether your broker is skipping some details as you can ask for all the details yourself. You can go as deep as you want with information you obtain. Bank loan officers know every piece of loans they have and all policies related to each loan, so you won’t miss a thing.
You can negotiate directly with the lender.
If you believe you can make better deals with any of the lenders you talk to, then you can do so yourself.
The Cons of Going Direct to Bank
- You will not have a lot of options, unless you visit other banks.
Since bank loan officers only have information about the lenders they work for, you would have to talk to several different lenders in order to attain options.
You may not know what questions to ask.
If it is your first time, chances are even if some information is provided to you, there are some that you might miss. This can be resolved by with in-depth research, which means you have to be really prepared the moment you start asking around for a loan.
Discussing with various lenders can become confusing as they usually have different policies.
Once you have talked to several lenders in a short span of time, everything can get confusing. You might end up mix-matching information. But if you can be as organized as possible with all the information you have, this problem can be managed.
Not all lenders have Chinese-speaking representatives that you can talk to.
Although some banks have Mandarin-speaking representatives, not all do. If you can only speak effectively in your native language, you would have to skip several lenders whom you cannot communicate with appropriately. This is equivalent to missing some potentially good deals.
You would need to find a translator who can provide you with a certified translation of your documents.
This can be hard to find if you don’t work with real estate professionals. This task is easy for mortgage brokers as they are usually well-connected. You can ask the lender you are talking to for recommendations, though.
Carefully weigh the pros and cons of going directly to the lender and hiring a mortgage broker. It is always dependent on your situation. However, when looking for mortgage for Chinese investors, we do recommend getting a Chinese-communicating mortgage broker as it eliminates one of the biggest issues of foreign investors – the language barrier. If you need help finding a specialised mortgage broker, send us a message and we will give you a list of highly commended and recommended mortgage brokers in Australia.