8 Reasons to Use a Mortgage Broker (that you may not have known)

There is a common misconception that mortgage brokers may no longer a valuable asset to a borrower and have been made redundant by modern technology. Many regard mortgage brokers as an impediment to getting the required finance in an efficient way.

It is true that the internet and technology has changed the way we bank, including to some degree, the way we borrow money. Banks have done a wonderful job encouraging customers to come directly to them without having to leave the comfort of their own home let alone having to go through a third party like a broker.

BUT, there are some things the banks leave out about the downsides of getting finance directly - and by extension, the value of having a good broker on your side. These are 8 of the best reasons that you should at least consult a broker when you need to borrow money (the is list is expanded upon below): Face to face relationships, Hidden deals, Hidden lenders, All the shopping done for you, single lender risk, objective advice, support, loan structuring.

1. Face to face relationship - these days, most of the loan application process is done via the internet and call centers. The people who process your application will never meet you or care about you. To them, you are essentially just an application number. On the other hand, a broker is someone you can meet, suss out and in many cases develop a long, trusting relationship. A broker is someone who gets to know and care about you and you can call them directly when you have a problem.

2. Hidden deals - If you think you can find all the best loans and rates by sitting in front of Google...then you may be in for a surprise. There is often a hidden layer of loan products that are limited for distribution among brokers. Many of these products may be structured better for borrowers than the advertised products and deals. A broker has complete access to these deals and will assess them along with mainstream products when making a recommendation to you.

3. Hidden Lenders - Not all lenders are banks. No I am not referring to loan sharks! There are many large and established financial institutions that lend money on similar terms to the banks. These lenders are often more flexible than the big banks and will consider lending to people or projects that the big banks will automatically reject because they are super conservative. This is especially true in commercial situations such as business or construction finance. A good broker (like Capstack, sorry couldn't resist) will have strong relationships with these lenders and can make a good case for your project to get funding that would never get in the door at the big banks.

4. All the shopping done for you - It can be both intimidating and cumbersome to shop around for the best rates. Sure there are online aggregators (more faceless number crunchers), but even those don't help explain all the nuanced difference between the options you may find. A broker does all the legwork for you and will make a recommendation based not only on the what 'appears' to be the best rate, but also what is best for you and your specific circumstances.

5. Single lender risk - If you do all your banking with a single lender you are vulnerable to policy changes that can effect a significant proportion of your finances. For example a bank can decide that it wants to decrease the proportion of money it is willing to lend against the value of an asset (LVR). If you happen to have more than one asset with a single bank and they make this type of policy change, you may be in for one hell of a bill. Brokers can help diversify your position and protect you.

6. Give objective advice on all the available options - The broker is truly impartial. Sure they want to help get you the loan you need because that's how they get paid. But it doesn't matter to them WHICH loan you eventually get. So there is no incentive to give you any advice that pushes you toward a particular lender over the others. All that's left then is for the broker to make recommendations in the clients best interests and to build a good relationship based on trust and success.

7. Support - Borrowing money can be an arduous process. There are heaps of forms to fill in, often those forms need to be resubmitted more than once. The process can be tiring, intimidating and nerve-wracking. A broker will not only be of moral support during this process but will handle a lot of the administrative things for you so you can get on with the heap of other important things you have going on.

8. Loan structure - Sometimes, particularly in commercial scenarios, there is more than one way to set up a loan. Here's a recent example: we had a client that was starting a new business and didn't have enough capital to complete the fit-out at his premises. We pitched initially pitched the loan to lenders purely as a business loan. Unfortunately, in the current climate of uncertainty (covid-19, lockdowns....more lockdowns - ok you get it) the lenders were pretty unanimous in their reluctance to process the loan with the amount of capital the client was bringing to the table. And he didn't have any extra to bring to the table. If that were an application direct to a bank, that would have been the end of the story. But it wasn't. We put our heads and came up with another solution (it was pretty genius, if I say so myself). We went back to the lenders and asked them to lend some of the money as a traditional business loan and then the rest they could lend as asset finance on the fit-out. This gave a number of lenders the comfort and security they needed and we were able to get the deal done.

That's a little story triumph to end the list but I hope I have proven that brokers are far from redundant and that you will consider engaging a broker for your next project. (Obviously Capstack are one of only a few specialised commercial brokerages, and are ready and willing to help you with your next commercial endeavour, but that's beside the point).

Please feel free to discuss your (hopefully positive) experiences with borrowing, either directly or through a broker - we'd love to hear your comments. Also, if this article was helpful to you in any way, feel free to share it with whomever you like. Or if you have any questions, feel free to post them here and we'll answer them for you.

Thanks for reading...

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