Mortgage brokers act as intermediaries between you and lenders, helping you find the best mortgage for your needs. But other than that, there are a few more aspects of your life they may help you with! How much do you know about them?
Thing #1: They Work on Commission
How mortgage brokers get paid
The most common method of paying a mortgage broker is through lender-paid compensation. It means that the mortgage broker receives a commission from the lender for securing a loan for the borrower. Typically, this commission is a percentage of the loan amount, depending on the lender and the loan product.
Some mortgage brokers may receive bonuses or incentives from lenders for meeting certain sales targets or promoting specific loan products. However, you must choose a broker with your best interests in mind and not solely motivated by financial incentives. Understand that the commission structure for mortgage brokers can potentially impact the mortgage options they present to you.
Thing #2: They Have Access to Multiple Lenders
How mortgage brokers have access to multiple lenders
Mortgage brokers can access multiple lenders because of their professional network and relationships within the mortgage industry. It includes banks, credit unions, and independent lenders. They act as intermediaries between borrowers and lenders, helping the former find what meets their needs.
When a borrower contacts a mortgage broker, the broker will assess their financial situation. The broker will then work with the borrower to complete the mortgage application process. Brokers may also have access to exclusive mortgage products or rates unavailable to the general public.
Thing #3: They Can Help You Improve Your Credit Score
How a mortgage broker can help you improve your credit score
The basic principle is that the higher your credit score, the lower your interest rate. This is because a higher credit score indicates a lower mortgage default risk. It makes you a more attractive borrower to lenders.
A mortgage broker can help you improve your credit score by providing access to multiple lenders. They may suggest strategies such as paying down revolving debt or using your tax refund to pay down debt. They can also help you manage your debt and suggest ways to reduce your debt-to-income ratio.
Another way a mortgage broker can also help you improve your credit score is by transferring leads to credit specialists.
More Than Just Mortgage Brokers
Other than acting as intermediaries and helping you improve your credit score, below are ways mortgage brokers may help you with.
SMSF finance
Did you know it may be possible for your SMSF to borrow to invest in real estate? Purchasing a property via an SMSF is slightly different from purchasing a property directly, but they may help with the process and help you obtain appropriate finance.
Car finance
People often make the mistake of buying a car using finance through a dealership after seeing a sign that says ‘Drive away, 0% finance to pay’. But all too often, dealerships sell these vehicles at inflated prices.
A mortgage broker will negotiate for you to help you obtain the car and finance at a great rate. It’s safe to say the dealership won’t have the same motivations.
Equipment finance
Trucks, buses, forklifts, and cranes. Computers and office equipment. Medical and manufacturing equipment.
If your business needs equipment and doesn’t have the cash to pay for it upfront, brokers may help line you up with appropriate financing options.
Commercial or business loans
If you want to start your own business, chances are you will need some finance to get it up and running. Mortgage brokers or a business lending broker may provide financing options for more established businesses to manage their capital and assist with improving cash flow.
Debt consolidation
Have trouble juggling several debts? They may help you consolidate them into one tidy loan that’s simple to keep track of. These debts include personal loans, car loans, small debts, credit cards, or store cards.
ATO tax debt
No one enjoys the ATO impatiently hovering over their shoulder, waiting for them to pay off a large tax debt. But as cash flow is the number one business killer, paying it all off in one lump sum isn’t any more appealing. While it is possible to enter into tax payment plans with the ATO, they’re not always the ideal option, and it’s worth exploring other avenues with business loan lenders.
Reverse mortgage
A reverse mortgage allows you to borrow cash against the value of your home. It’s an option that appeals to people aged 60 years or older to unlock the wealth in their homes after retirement. It can be tricky to navigate, as interest rates and ongoing fees can be higher than the average home loan, and the interest compounds too – so it’s worth having someone who knows how this works.
Throughout this blog, we have highlighted three things you may or may not know about your mortgage broker and a few on what they may help you with.
Whatever type of mortgage broker, choose one that is reputable and trustworthy with your best interests in mind. Choose Initial Finance Group. Rest assured that you get the best advice and guidance throughout the process.