All Topics / Finance / getting 1st mortgage – via broker or bank?

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  • Profile photo of tess85tess85
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    @tess85
    Join Date: 2007
    Post Count: 48

    Hi all, I've been lurking on these forums on-and-off for a while. Now hubby & I are actually in a position to buy our 1st home (NSW) – but we're getting bogged down in how to get pre-approval for our loan!

    Does anyone have any advice on whether a mortgage broker (eg. Mortgage choice) is better than a bank (the big 4 banks), or whether a non-big-4 bank is better (eg. Bankwest, HSBC)?

    We are having an introductory meeting with at least 5 financial institutions (eg. mortgage choice, bankwest, hsbc, and 2 big banks eg. CBA, ANZ) but I'd be interested to hear your opinions now!

    Cheers to all, and thanks in advance :)

    Profile photo of tess85tess85
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    @tess85
    Join Date: 2007
    Post Count: 48

    I should also mention that we are not looking for a low-doc loan… we have 20% deposit and are looking at a property in the $500k-$600k range. [I know that under $500k will have free stamp duty for first home buyers, but we are in Sydney and need to be close to work in the city)

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    HI Tess

    Must admit my opinion is slightly biased being a broker myself however feel that a Bank is hardly like to tell you that you can do better down the road.

    Lodoc loans are a specialised area especially in the current climate and your mortgage broker should be able to assist you in structuring the loan correctly the way in which it works best for you and not the lender.

    Unfortunately I have little time for sausage machine brokers like mortgage choice who are merely interested in churning you through and the service and advice is only as good as the franchisee.

    A lot of the lenders you have mentioned do not have cost effective loan products in regards to lodoc loans so at least a broker can give you a few alternatives subject to your requirements.

    Would need a few figures and some further information to make a decent recommendation.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of tess85tess85
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    @tess85
    Join Date: 2007
    Post Count: 48

    Thanks for your response. We are not looking for a low-doc loan, we have 20% deposit and substantial documentation (both have full time jobs. We have both worked for 1 year, being recent uni grads)

    I'm just preparing the documents for Mortgage choice, gee, they want you to bring a whole lot of things along! (last few pay slips, credit card statements, etc). I don't know if I can be bothered having consultations with 5 different lenders…..! I've had to print off so much stuff already!

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
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    Tess my apologies comes of typing quicker than i was reading.

    Saw the word lodoc and went for it lol.

    With what you have even Mortgage Choice should be able to cope with that sort of loan enquiry.
    There are a couple of lenders waiving their application fees for First Home Buyers so that all bears well and you should be able to negotiate a good deal.

    Why not post what they recommend once you have seen them and we can make comment.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of jasandlivjasandliv
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    @jasandliv
    Join Date: 2008
    Post Count: 39

    I'd definately go with a broker. I'm stuck with a crap Wizard loan that i don't even have the option to swicth to IO now that i have rented the property out. I'm looking at another IP at the moment and am tied up with a really inflexible loan product. I can recomend a really good mortgage broker in sydney (nth shore). He knows his stuff and has been in the industry for years.

    Profile photo of TerrywTerryw
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    @terryw
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    You are wasting your time going to meet 5 different lenders. you can only go with 1 of them.  A good broker should save you time in this regard.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Edvico_kvnEdvico_kvn
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    @edvico_kvn
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    Post Count: 46

    Hi Tess,

    A good mortgage broker should be able to offer the same product (in terms of rates, fees, features ect) as all the 5 lenders you are about to meet.  So you would save yourself a lot of time by engaging a knowledgeable broker that can not only offer you the same product as the lender's loan Officers/Managers but be able to highlight the pro's and con's of the entire product suite from a wide range of lenders.  It would save you the time and effort (in printing out multiple copies of docs) by seeing a "good" mortgage broker.

    As mentioned above, you gotta be careful as there are good mortgage brokers as well as pretty poor ones.  You may wanna see a couple of brokers to compare their style, knowledge and level of advice you feel they can provide you.

    Finding a good broker can be compared to the analogy of buying a can of Coke.  If a can of Coke has a rrp of $1.00 and Woolies sells it for a sale price of $0.70, then any Tom, Dick and Harry can purchase a can of Coke for $0.70.  So if Bank A or Bank B has a limited time special offer of  low rate or low fees, all/most brokers can offer that same product to its clients.  But as consumer of a can of Coke, wouldn't you value the experience of consuming that Coke a lot more if it was offered chilled, with ice, a slice of lemon and with a paper umbrella.  So when you choose a broker, try find a one that offers that little bit extra (ice and lemon) such as financial analysis of your family budget, tax advice such (max negative gearing benefits, minimize capital gains tax etc), assess the impact of how rates rises on your cashflow, structuring the loan to accomodate likely changes in your lifestyle (changing PPOR to IP).

    So I would advise you to a) choose a broker over directly seeing lenders, and b) assess the brokers' abiltiy to perform the above value-added services and not just engage a broker that can "purchase that $0.70 can of Coke that you yourself can purchase" by visiting the Lender directly.

    Cheers

    Kevin

    Profile photo of flashflash
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    @flash
    Join Date: 2003
    Post Count: 140

    Hi Tess,
    Also down the track a good broker can help structure your investment loans so you don't end up in a knot.
    A single Bank will try and xcoll all your loans and can be a nightmare to undo.

    Not only that  but with a broker you usually get to deal with the same person .
    I email my broker at all times night and day……………Sorry Richard…….
    and ALWAYS get a reply

    Cheers

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Steve

    You know there is no limit when i take your emails…. at time is good for me.

    Hope all is well mate.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of Stuart WemyssStuart Wemyss
    Member
    @stuart-wemyss
    Join Date: 2003
    Post Count: 598

    Hi Tess

    I would just say that you shouldn't act on tax or financial advice from a mortgage broker unless they hold an Australian Financial Services License or are a Registered Tax Agent. Just make sure they do.

    Cheers

    Stuart

    Profile photo of sydmegsydmeg
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    @sydmeg
    Join Date: 2008
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    I too am looking at securing our first loan and it is a minefield out there. We are currently just shy of 20% deposit, but will be well over it in a couple of months time as my father is willing to give us a substanital loan. My husband is self employed therefore we will be looking at a lo doc loan for the obvious reasons. We went to one broker who was recommended by our accountant and he was so aggressive that we left feeling like we had been violated. Went to one the CBA next and we have been non stop hounded by the lender since.

    How do we find a lender who is in it for us and not the dollars that follow? How do you know that you have found a god lender/broker?

    Megan

    Profile photo of gibbo1gibbo1
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    @gibbo1
    Join Date: 2008
    Post Count: 152

    Hi Tess & Megan,

    I have recently I decided to become a broker.  My initial stop was lookin at the franchised guys (Refund Home Loans, Mortgage Choice, Smartline, etc)  These companys are charging $10-70k to get new brokers in.  Alot of new previous expirience and tellig the new comers the can make 6 figure incomes very easily without too much effort because you are using there name and systems.  Alot of people are getting into these and then struggling to make the level to live comfortably.  Although they are trained well in simple loan applications, as Richard mentions often the structuring loans when you have multiple properties is important, and many franchised brokers are unsure.

    I then went to a smaller aggregator who introduced me to one of their brokers after meeting myself.  The aggregator knew the broker well and thought we would be well matched.  I now have a highly expirienced broker as my mentor who I work for.  I figured for myself this is a better way to go as I get one on one guidance and advice, he is more interested in my progress as it helps his business (if I make mistakes it hurts his business).

    We both have the same views on customer service – its all about service.  In our earlier conversations we discussed simple things like honesty, doing what you promise, friendly, helpful, etc.  My background – I owned a pizza shop a few years ago and ran it for 8 years.  In the area I operated if you had no customer service skills you would have no business.  I had times I put alot of effort in, and lost money on some orders (where the customer was at fault) to keep the customer happy as I knew the importance of customer referrals.

    I think alot of problems that they come into this industry wanting to make millions (and getting promised that as well).  They are driven by money and they're not a people's person – this industry is all about dealing with people.  Franchise's measure the quality on how many applications get approved, not if they are structured correctly.

    There are some really good brokers out there, best way to find them is word of mouth and asking for referrals on here.  On finishing, there are some good franshised brokers who like the convienance of the franchised system.

    Profile photo of Edvico_kvnEdvico_kvn
    Member
    @edvico_kvn
    Join Date: 2008
    Post Count: 46

    Hi Stuart Wemyss,

    I totally agree with your comment……….. "I would just say that you shouldn't act on tax or financial advice from a mortgage broker unless they hold an Australian Financial Services License or are a Registered Tax Agent".

    Only registered tax agents/accountants should provide tax advice.
     
    So if a borrower needs and wants tax advice when applying for a home loan, most mortgage brokers will not be experienced and suitably qualified to provide tax advice.

    Accountants that also provide Mortgage Brokering service are in an unique position that can assess a borrower's tax situation and also advise on the most suitable home loan, not just from lowest rates/fees/features point of view but also from a tax planning perspective.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Totally agree with the last couple of comments.

    We see it all the time Accountants giving Financial Advice when they are not licensed to do so.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of sydmegsydmeg
    Member
    @sydmeg
    Join Date: 2008
    Post Count: 3

    I have been reading some of the posts from the other forums and it sounds like I am not the only one frustrated with mortgage brokers. It is so unfortunate when people enter an industry with only the view of greed. It will one day com back to bite them, Eddy Groves is living proof of that. Anyway I have Stuart Wemyss' book. Hopefully, if anything, I will become educated enough to put the pressure on the next broker I see.

    Just another quick question, the bank was offering this product which allows a 0.70% and no fees & charges, plus a few other discounts linked to other products for the life of the loan but you had to pay $350 p.a. What are your opinions on these type of products?

    Megan

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Megan

    All of the Big 5 Retail Banks offer a Pro Package of some sort but the terms, conditions and benefits vary considerably.

    It is very much a horses for courses type product. If you have 1 property and cant see yourself buying anything else then probably not for you. I have many clients with dozens of properties under the 1 package (some lenders limit you to a number of loan applications) and they are saving literally thousands in application fees, valuation costs and interest each year.

    I am sorry that your experience to date with Mortgage Brokers has not been a happy one but as i continously mention it comes of allowing a plumber in the morning to be a mortgage broker in the afternoon.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of sydmegsydmeg
    Member
    @sydmeg
    Join Date: 2008
    Post Count: 3

    I know there is some good ones out there, I'm just going to have to be patient, trust my instincts and not feel pressured to rush into anything. I have found that a lot of them use bullying  tactics and emotional fear to try to get you to do what they want. The mortgage broker we saw spent more time on the phone being aggressive with other clients that I was shocked he was in business at all. It was like they had never heard of business ethics or customer service.

    It's extremely frustrating but I'm hoping I can find a broker that will be able to help us now and hopefully in the future.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Meg

    Without fishing for your business (promise i dont do that or need to) if you want to shoot me an email with what you are after i am happy to come back to you and give you some suggestions and then you can go direct to the lender if that helps.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    100% Investment Finance now available on selected properties. Email us for further information.

    Profile photo of tess85tess85
    Member
    @tess85
    Join Date: 2007
    Post Count: 48

    Meeting a potential mortgage broker today (guy from Mortgage choice). Do you think it is worth asking for a 30% or 50% rebate on commission? My husband & I have well-paying jobs, and though this is our first property and we are young, we expect to buy a couple of IPs before we are 30.

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