When I saw how many lenders and mortgages are available these days, to be honest I freaked out. How on Earth do I start to compare hundreds of different mortgages, each with its own interest rate, length, fees, conditions, etc? Sometimes it just feels like too much – first the huge task and responsibility of choosing a house that is right for me and my family, and now this loan business? Let me tell you – in the world of mortgages you need every help you can get. So this is where mortgage brokers come in. There are many countries where they don’t exist, so I’ll explain what mortgage brokers do.
Mortgage brokers are people who work with (hopefully) many lenders and – at no cost to you – help you pick the loan that suits your financial situation the best. They are supposed to sit and carefully explore your wants and needs, your finances, find out what your borrowing capacity is and recommend a loan. If you decide to proceed with that loan, they help you with the whole process; handle the paperwork and everything else until you get the money. So who pays for their services, you ask? The lenders – banks and companies they work with.
The advantages of using mortgage broker are obvious:
• no need to go shopping between banks, which saves time
• you get explanation in plain English about how those complicated loans work
• you get someone to negotiate a better deal for you with the bank
What you don’t want your mortgage broker to do is:
• get commission based on the amount of your loan or on the interest rate
• work with small number of lenders
• be himself a lender
To make sure you have the right person for the job you can
• Ask to see all the lenders your broker works with
• Ask for references from other clients
• Ask to disclose their commissions – so you can make sure he has no personal interest in pushing a bigger loan or a loan with high interest rate on you.