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Using mortgage brokers for your home loan |
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Thursday, 17 January 2008 |
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These days, with so many different loans and lenders in the market, you might rely on a mortgage broker to do the legwork for you. Mortgage brokers may be able help you find out about suitable loans and arrange special deals.
However, as with any adviser, do some checking and shopping around yourself. Make sure your broker is finding a competitive loan package or you could end up paying more than you need to.
Most brokers offer only a limited range of loans. They get paid a commission and some may receive other benefits from the lender as well. Mortgage brokers are not financial advisers, and are not obliged to find you the best possible deal unless they specifically agree to do so.
If you just use a broker, you may miss out on some of the cheapest loans in the market. Some of these loans are provided by lenders that don't pay commissions and are therefore not included on the panels of lenders from which brokers select their loans.
Even a small difference in the interest rate can make a big difference to the amount you pay. For example, take two loans, one charging 6% in interest per year, and the other charging 6.5%. The half a per cent (0.5%) difference on a $150,000 home loan over 25 years, can cost you an extra $13,900 if a broker sells you the more expensive loan.
Easy ways to shop around
Shopping around for a home loan, especially on the internet, is easy.
Use CANNEX
Its website (www.cannex.com.au) lets you search for loans according to the type you need, and find the cheapest one. This site is free, independent and used by the industry professionals because its research is widely considered to be thorough and up to date. CANNEX also offers links, where available, direct to the lender so you can read the fine print.
Check magazines
Various consumer and personal finance magazines devoted to mortgages or money can also show you what the going rates are, and then you're much more likely to find the best loan. |
