There are lots of reasons why potential borrowers visit mortgage brokers, and knowing their motivation can help brokers build a successful business that services these needs.
Know-how and expertise
If you’ve ever sat down to compare financial product offerings from a number of different providers, you’ll know how confusing it can be! Variable rate versus standard rate versus fixed versus split rate? Features and benefits and limitations abound.
Mortgage brokers provide specialised knowledge of these products and the skills to interpret the data. Brokers are armed with industry knowledge, extensive training from lenders, as well as a minimum qualification of a Certificate IV in Finance and Mortgage Broking.
Recent results from Standard & Poor's Rating Services’ Global Financial Literacy Survey found that over a third of Australians don’t have basic financial literacy – a pretty important set of skills when it comes to measuring up the pros and cons between different home loans.
Mortgage brokers are often involved in negotiating a home loan deal for their client – this is especially true for the brokers associated with an aggregator or franchise that can have the purchasing power of hundreds of other brokers behind it.
In addition to bargaining for better rates, brokers can help their clients get better loan features, like a redraw facility, extra repayment options or offset accounts. The headlining rate is often just the tip of the iceberg when it comes to what buyers are looking for in a loan.
Plus, for the vast majority of customers who use mortgage brokers, the service is free. Brokers are paid a commission by lenders as a percentage of the loan.
Time is money
Mortgage brokers need to be trained in the products they are recommending. This means that in addition to their Certificate IV or Diploma of Finance and Mortgage Broking, brokers undertake training from the lenders on their home loan products. In general, mortgage brokers will be trained in and have access to loans from 30 or 40 different providers.
Combine a lack of expertise with the sheer number of borrowing options on the market, and the average punter would have to spend hours – if not days – combing through websites and product disclosure statements in order to get the same level of information that a mortgage broker has access to at their fingertips.
Clients with special financial situations might use the services of a mortgage broker to help them get their loan approved. Low-income earners, those with a limited credit history (including new arrivals to Australia), or people who have very specific requirements from their home loan are regular patrons of mortgage brokers.
Become a mortgage broker
There are lots of growth opportunities for mortgage brokers in Australia, with IBIS World reporting a 5 percent growth in the industry in the five years leading up to 2017. Check out the Registered Training Organisations across the country who offer the Certificate IV in Finance and Mortgage Broking.