Why Use a Mortgage Broker?

Unfortunately, when buying property the chances are you will need to borrow money. This debt can be the largest debt you will ever have, and take the longest to pay off, so give the finance question the respect it deserves. And getting the best deal from the bank may save you thousands.

A Mortgage Broker can help lead you through the mortgage application process independently from the banks, get you a great deal and work with you to reduce your debt.

How did the Mortgage Broking Industry evolve?

Years ago, if you wanted to get a loan you needed to go to the bank and speak to your personal banker or branch manager. The banker had most likely been there for years and over time knew you very well. Customers hardly ever changed banks and the experience of applying for a loan was stressful and scary. I remember going to see my bank manager back in the seventies, I left in tears, no loan and feeling very small.
As banks changed and became like any other business – looking at meeting budgets and targets – the personal banking staff were streamlined and at the same time staff turnover increased, meaning the long term banking relationships no longer existed.

Mortgage Brokers came into the market, as they fulfilled a need. Clients could build a long term relationship with a broker, the process was friendly (not scary) and you could access all the lenders in one meeting. Along with this the broker could negotiate a very good package on your behalf.

All this, and the service the brokers offered was FREE because the lenders paid the brokers a commission.

What has changed?

Well, like a lot of industries and businesses the internet has changed everything. If you previously went to a broker to find out what the lenders could offer and what the best interest rate was, you can now just as easily do this by searching on the internet.

So why use a broker at all, are they obsolete?

Most clients would say that the main search criteria is the interest rate; if this is the case then it would be much easier to simply search the internet. So if it is only about the interest rate why use a broker at all?

This is likely to be the largest debt you have – shouldn’t you take care to look at all factors not just the rate. Shouldn’t you also have regular reviews to ensure the best debt reduction strategy for you is in place? The extra things a broker can do for you…

1. Run a needs analysis to see what you need now and what your future needs might be
2. To recommend suitable loan products, and advise why they would match your needs
3. Recommend ways to improve debt reduction
4. Help package, present, and negotiate your loan with the chosen lender
5. Assist you throughout the loan process all the way through to settlement
6. Liaise with any other professional if required
7. Some brokers will offer quarterly reviews just to make sure the loan you have is still the most suitable – your needs will change and therefore your loan needs will also change.
8. Some brokers may also charge fees for additional services, or extras that other brokers may not offer.

To me the most important advantage of using a mortgage broker is their ability to negotiate the best deal with the banks for you. You cannot get this specialist advice from searching the internet, or  certainly not banking staff.

You need to find an advisor that understands what you are trying to achieve and build a long term relationship with them. Choose a broker from the New Zealand Mortgage Brokers Association (NZMBA).

My recommendation is to try Jon Purdey at Edge Mortgages, he’s very professional, and is great at negotiating with the banks, on 021 979 335 or 09 448 5428 Connect Mortgages, who helped with this blog, or try Harcourts own mortgage broker Mortgage Express.