We know the process of securing finance for a home purchase can be daunting, especially if you’re a first home buyer or thinking about investing for the first time. We spoke to our friends at Lateral Partners for some advice.
First up, what’s the difference between a mortgage adviser and going straight to the bank?
Banks will typically analyse your income and expenses to identify whether you can service a mortgage. They will then approve or decline a new home loan based on your current financial position.
However, that’s just one part of a mortgage adviser’s role. A mortgage adviser will typically also factor in your future goals and needs, events that could impact affordability in the foreseeable future, and different finance options in relation to your requirements. Also, if push comes to shove and lending may not work, an adviser will often be able to advise you on options for moving forward.
Four reasons why you should use a mortgage adviser.
1. Economic and market knowledge
Mortgage advisers need to keep up to date with what’s happening in the market and the wider economy, as it directly affects the advice we give to clients. Whether it’s economic impacts like inflation, changes to the OCR, global events like COVID, or market-specific items like bank interest rates and policy changes, mortgage advisers are generally in touch with what’s happening at the ‘coal face’.
Any changes in economic and market conditions can impact a client’s lending capabilities, and, in turn, directly affect their lending and purchasing journey. Having the most up-to-date market knowledge enables us to give the best advice to clients, which is an important part of our compliance under the Financial Markets Conduct Act 2013.
2. Fingers in multiple pies (banks, non-banks, and lenders)
When you go direct to a bank you will only be given the options from that bank’s loan products and interest rates. However, mortgage advisers will have connections with multiple banks and other types of lenders. This means we can provide more options to suit your specific financial position, needs, or goals. Mortgage advisers also are up to date with all lenders' current credit criteria, rates, policies, and offerings, enabling them to better navigate the space and advise clients accordingly.
A mortgage adviser can approach multiple banks and lenders to obtain multiple offers for their clients. This gives you the flexibility to choose the best offer that suits your needs.
A little tip: We would caution you against approaching more than two lenders at a time, as most do complete credit checks, which can pull up other recent credit checks completed by other banks. This “shopping around” can reflect negatively, as it can be seen as a waste of a bank’s time and resources.
3. We know what banks and lenders are looking for
Mortgage advisers are well versed on what banks and lenders require and how to best present this to them. This is especially important when approaching main and near banks as they are regulated by not only their own bank policy but government policy such as the CFT/AML and the CCCFA.
Having someone in your corner who is experienced in the lending environment and who could identify potential causes for concern and mitigate the risk around these or identify the things that could benefit you as a borrower, is crucial through the lending application process.
4. There's no cost to you
With traditional mortgage advice through a main or near bank, the Mortgage Adviser will generally be remunerated by the bank for their service via a commission payment on settlement. The service isn’t free but is paid for by the lender.
Banks or lenders will generally pay a mortgage adviser anywhere from 0.5% to 1.5% in an upfront fee and potentially trail income of 0.15% to 0.20% of the total loan amount.
Other types of lending advice may have a different fee structure. For example, at Lateral Partners, we also supply services around property development lending. In this case, where there is no commission paid on a transaction, Lateral will specify the fee we charge to clients before we are engaged, which is generally capitalised into the total lending amount and paid to us on the drawdown of the funds.
In summary
Having good support from professionals who specialise in property finance will take a large amount of pressure off you so you can focus on the end goal, to make your next property purchase.
If you’re looking to secure finance for your next purchase or project, it's a great idea to have a conversation with a mortgage adviser, even if it’s just to get an idea or pick their brains about the process. We might be able to identify some things you haven’t considered, such as government policy, bank policy, economic impacts, and your financial position.
Contact the team at Lateral Partners for an obligation-free chat today.
About Lateral Partners
We are an experienced financial advisory firm offering comprehensive advice for a wide range of situations. With extensive experience in the industry, we specialize in securing capital solutions for clients and leveraging networks and connections to provide you with unparalleled financial advice.
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