Page 47 - Smart Money

Smart Money

Using a mortgage broker

A broker has a panel of lenders all offering different products. As brokers
it is our job to understand the different bank policies. Going from one
bank to another and getting rejected negatively impacts your credit score.
Reputable brokers offer more options, more lenders, and you will not
ruin your credit score. Be sure to ask a real estate agent, financial planner,
family members and friends if they can recommend a good broker.

We work for you, our client. We act as the intermediary between
the bank and the client, doing all the running around, following
up with the bank and keeping everyone up to date on the
application progress. The best part for our clients is that we are
paid for all of our time and experience by the banks. Our clients
benefit without having to pay the bill.

The first thing we do as your broker is take a ‘fact find’ over the phone,
which includes your full name, address, income, how long you have been
working there, your assets and liabilities. From all that information we
can see if you meet the banks’ policies, if you have enough for a deposit,
and if you can afford it, because really, those are the three most important
things. If you don’t fit the criteria or tick all the boxes, then we will send
you an email with some information on finance, and tell you what you
need to do. Then we follow up with you after a month, or two months,
or three months, as advised in our email.
We have a serviceability calculator for each bank. We type in your income
and your liabilities and it tells us how much you can afford. That is another
good reason to use a broker, because we can go to all the different banks
that have a calculator, and we can get you more money if you need it. The
amount you can borrow could vary by as much as $20,000 to $30,000,
because they all use different parameters for assessment.

The banks have different assessment rates – what the bank assesses you
can afford to repay. So, as an example, the interest rate from one lender
might be 4.04%, but the assessment rate for that lender is 7.25%. That