Using a Mortgage Broker

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Researching the type of loan you need to get to buy an investment property can be a time consuming task, especially when you don’t understand all the features and restrictions contained in the product.

Mortgage brokers solve this issue by becoming experts on the product offerings from all of the major lenders and then recommending the appropriate product for you.

However, it is important to know that whilst most mortgage brokers don’t charge a fee for their service, they do receive commissions from the lenders for signing up new loans.  Understanding this, you can proceed with caution when a mortgage broker recommends a particular product.

Find a Reputable Broker

Getting a recommendation from a friend or fellow investor is always a good place to start when trying to find a trustworthy broker.  When I say trustworthy, I mean someone who is looking after your best interests and not just recommending a loan that pays them the highest commission.

Ultimately you may never know if the broker is pushing you towards a higher commission product (meaning they make more money) but as long as they solve your loan problems well, then it is a win-win situation.

A good broker should be able to analyse your financial position and give you an estimate of how much money you can borrow.  If you decide to proceed with the recommended home loan, they will then fill out most of the documentation required to get pre-approval from the bank.

Dealing with Banks

If you start using a mortgage broker, you may never have to actually speak with a bank during the whole mortgage approval process.  This can be a good thing as some banks and lenders have poor customer service.  Let your broker deal with the banks and you can just concern yourself as to whether your broker is doing a good job or not.

While they are similar, all banks have their own rules in regards to serviceability (how you can repay the loan) and risk.  Therefore if you apply directly to one bank and get approved for a certain loan amount, there is no guarantee that the next bank will approve you for that amount.

Mortgage brokers should already have a good understanding of the restrictions that some banks have and be able to direct you towards the best lender based on your circumstances.

Make Your Life Easier

A key part to being a successful property investor is being able to build a network of experts that you can rely on to make your life a bit easier.  Having a good mortgage broker as one of those people is going to make the process of applying for finance easier, quicker and with no added expense.

Unless you are sure you can get a better deal on your own, it is highly recommend that you consider using a broker for your next investment loan.

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7 Responses to Using a Mortgage Broker

  1. When looking for a brokers always find one that you can talk with face to face, then shop the broker around to make sure you are getting the best rate and paying the least amount of closing cost.
    Travis [email protected] rates recently posted..Benefits of a RefinanceMy Profile

  2. Having a mortgage broker is really convenient for me. And you are right we have to make sure that we talk to them not on the phone but face to face. Thank you for some tips on how to properly choose your broker.
    [email protected] home business ideas recently posted..Start an Appliance Repair BusinessMy Profile

  3. MoneyBuzz says:

    Hello, Great blog on money. This has realy healped.

  4. zara lomax says:

    my mortgage broker is really good and even does home visits, but charges 295 after completion. Is this usual and a competitive fee compared to what brokers you all use. Any advice for me?

  5. Is it still possible to get an non recourse loan? May be the deal has to be super.

  6. WhatNewHomes says:

    Very useful- I would add that its always sensible to speak with family, friends and colleagues for a personal recommendation when it comes to choosing a reputable mortgage broker.
    WhatNewHomes recently posted..Four new property developments in Worcestershire by Taylor WimpeyMy Profile

  7. Kyle Pearce says:

    Great post regarding the positives of using a mortgage broker or agent.

    I am a mortgage agent licensed in Ontario Canada and sadly, using a mortgage agent in Canada is still a very under-utilized resource when purchasing a home.

    Most who already invest in real estate are probably using a mortgage broker, but if you aren’t… make sure you find a reputable agent in your area. If you’re in Ontario, feel free to click on my name and contact me! Love working with real estate investors like myself!
    Kyle Pearce recently posted..Low Mortgage Rates | 2.99% 5-Year FixedMy Profile

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