Deciding which lender to use when securing finance is a big decision that all homeowners and investors will have to make during their property ownership journey. Choosing the best lender is a time-consuming process which involves a vigorous amount of research, however, when you engage the services of a trusted mortgage broker it will enable you to make the decision with greater clarity and confidence.
As a mortgage broker, I am often asked how I source the best deal for my clients. The answer is through the application of a strict process that my team and I follow when selecting the most suitable lenders for our clients.
There are three stages of the process that we work through when deciding which lender is the best fit for our client’s particular situation and goals. These are:
Stage One – Where does the deal work?
This stage is of the utmost importance, as it is vital to select a lender with policies that are most suited to our clients’ unique situation. Every single client that walks through the front door will have their own particular nuances about themselves as borrowers, and specific goals that they are seeking to achieve. In contrast, all lenders in the country have their own credit policies and niches. It is our job as mortgage brokers to remain fully informed of any changes within lenders credit policies, as this knowledge enables us to take full advantage of new opportunities or to eliminate potential threats in relation to our clients.
We take into account a number of factors at this stage and they include:
- Source of income
We take into account the clients’ source of income. This includes whether they are self-employed or an employee. Do they rely heavily on commissions, bonuses or overtime? Are they employed full time, part-time or casually? Or do they have investment properties that generate rent or share portfolio that generates dividends? Do they have any miscellaneous income? How will the lenders treat all of these different income types?
- Living expenses
Living expenses include rent, current home or investment mortgage, personal loans or credit cards. We will look at how the lenders will treat all of these different expenses.
- Your end goal
It’s important to know what your goals are before you embark in this journey. So, your mortgage broker will be able to asses which lender’s product suits you the most. Your mortgage broker will need to know if you are seeking to utilise a family guarantee. What type of home loan are we looking for, an investment loan or a home loan? What is the loan to value ratio? How will the lenders treat all of these scenarios?
Stage Two – Who can give us the best deal?
Within this stage, we approach numerous lenders that are most suitable to our client’s situation, and negotiate the best deal on their behalf, prior to presenting the client with most economically viable options. We regularly negotiate substantially larger discounts than what is offered to the general public and rarely settle for the advertised interest rate. Contrary to popular belief, all lenders pay us very similar amounts and our opinion is not swayed by the commissions paid. Commercially, it is in our best interests to secure our clients the best deal possible.
There are a number of factors that we take into account when negotiating with lenders including:
· What is the size of the loan? Are the clients going to make interest-only repayments or principal and interest repayments? Are clients seeking a variable or fixed rate? What is the loan to value ratio? Is it an investment loan or home loan? Which lenders would be willing to negotiate the best deal for my clients?
Stage Three – Who will offer our clients the best post-settlement service?
Once we have narrowed our search down to the most suitable and most competitive lenders. We then look at what the banks can offer us in terms of service post-settlement.
We look at a number of factors including:
· Do they offer a nationwide branch network? Do they offer excellent online and phone banking? How well do they rate for client satisfaction? Do they offer an easy to use banking experience? What other products can they offer our clients to add more value? Which of these factors are the most important to my individual clients?
As you can see there are a number of variables that go into the decision-making process, and as mortgage brokers, we assess each of these factors and match the client with the most appropriate lender for their current situation. Working with both clients and lenders on a day to day basis, we have been able to develop an intimate relationship and a vast understanding of banks written and unwritten niches. Due to this wealth of knowledge, we are able to give our clients the upper hand by sourcing the very best deal available to them.