Five Myths About Mortgage Brokers
Mortgage brokers get a bad wrap, here's why.
Buying a house is a big commitment. It requires careful financial planning, research and consideration. Just like you wouldn’t sell your house without seeking advice from a real estate agent, you should always seek professional help before selecting a mortgage or home loan. However, there is a long standing stigma surrounding mortgage brokers - that they are money hungry snakes who are no better than a shady used car salesman.
Margaret Spaseska from Alpha Omega Financial Solutions wishes to change this attitude. She asked the people of Perth what their main reasons were for choosing the big banks over mortgage brokers for home loans. The comments came flooding in, with the majority of Perth misunderstanding the role of a broker. With the help of Margaret, we’re here to set the record straight. If you’ve questioned using a mortgage broker for help with your home loan, this will help clear up some false facts.
Myth: Brokers recommend the highest commission loan.
The public believe as commission-based earners mortgage brokers will always recommend the highest commission. Mortgage brokers have a duty of care to their clients to find them the best deal possible, irrespective of their personal profit. "As mortgage brokers, we present out clients with options based on their individual circumstances, and requests for their home loan," Margaret explained. Ultimately, the choice of home loan is left up to the client, not the broker. The majority of the comments indicated the public believed banks were more likely to give them the correct advice as opposed to a broker. However, bank lenders are under incentives to sell loans as each lender will have a specific sales KPI they must achieve. Couldn’t it therefore be argued the banks have more motivation to up-sell you loans than a broker does?
Myth: Cost free service = hidden costs.
When mortgage brokers advertise their services as free, they mean free. There are NO hidden fees associated with using their services. How do they make their money you ask? They are paid commissions once the loan has been accepted and approved. This does NOT mean the mortgage rates are higher when using the broker’s services; the rates remain the same and the commission is taken out of the existing cost of the loan. To summarise, you will not pay more or be charged a single cent for a mortgage broker’s services - the bank pays them a portion of their own profit from the loan.
Myth: All mortgage brokers are the same
Previous bad experiences with mortgage brokers are not a reflection of the industry as a whole. Margaret takes pride in her work and tries to differentiate Alpha Omega Financial Solutions from the stereotypical suit you may associate with the mortgage broker industry. Asking Perth for feedback isn’t the only way she has reached out to her clients – Margaret is known as the broker with the Beetle. A social media competition where she asks the people of Perth to keep an eye out for Herbie (her car) around town. If you spot it, take a snap of yourself and post it on Facebook tagging Alpha Omega Financial Solutions for your chance to win a $100 gift card.
Myth: Big banks are the safest option.
Banks are often perceived as the safer solution as people usually have a long-standing relationship with their bank of choice. However, mortgage brokers can offer you the same products as the major banks plus additional options from lending institutions not otherwise available to the general public. Margaret pointed out how all lending institutions are regulated through the same industry bodies as major banks and said "the risk is placing all the banking with the majors, as this limits the competition in the marketplace". If the public are always going to the big banks for home loans, there is a higher risk of a monopoly occurring.
Myth: Banks are easier than a mortgage broker
When you choose to get your home loan through a bank you must fill out the paperwork yourself. This means going back and forth to see your lender until you’ve got all the information filled correctly and ensure it is submitted on time. Mortgage brokers are able to come to you, will guide you through the forms and help to answer any outstanding questions you may have. Margaret said "in most circumstances we have very quick turnarounds compared to the banks. Our broker units have been allocated time frames." If you are looking for a quick mortgage top-up, Margaret would encourage potential home loan buyers to use a broker, as the loan can be processed within a week (sometimes sooner)!
Time to talk to an expert
There you have it - myths busted. If you still have some niggling questions or are unsure why mortgage brokers are better than banks, hit up Margaret. She’s already proved she’s willing to listen and open to taking your concerns on board. So if you’re thinking of taking out a home loan, speak to the broker with the beetle at Alpha Omega Financial Solutions on
0433 508 088 or send her a message on Facebook.