Should You Use a Mortgage Broker

With so many home loan packages out there, mortgage brokers sift out the best deal for you thus saving you time and effort.

You can buy a general insurance policy from an insurance broker, who will source for the same with the best features from the insurance companies that it represents. You can buy a unit trust from a financial consultant, who will choose the unit trust with the best returns from the unit trust companies that it represents. So why wouldn't you be able to apply a loan from a mortgage broker too.

Applying for a home loan from a mortgage broker is the latest trend in the competitive mortgage industry. The advantages of a mortgage broker are obvious and well documented.

Going direct to a bank / financial institution: Borrowers can always go direct to the banks or financial institutions who advertise heavily in the media. One phone call and a mortgage sales officer will attend to you at a place and time convenient to you.

No more do you need to meet your bank officer at the branch to apply for a home loan. It is very convenient to you.

Alternatively, you may shop for your home loan from the Internet. Most banks and financial institutions have a website which contains information such as interest rates and features of the available loan packages. For the financially literate and informed borrower who knows what he wants, this is a perfect channel to do his shopping for the ideal loan. He may not be able to apply online for a home loan directly through the Internet as yet but he certainly can make enquiries. The bank or financial institution will then send one of its mortgage sales officers to attend to you.

However if you are not financially literate and do not understand the mechanism of mortgage products, you may have to meet and speak to many mortgage sales officers from various banks and financial institutions to better understand the available mortgage products before making an informed choice. This may be time consuming and tiring. And in your process for better knowledge, you may become confused as each of the mortgage sales officers will claim that their loan product is the best without explaining to you the fine print and terms and conditions thereof.

So it may be better for first timers or the less informed to consult a mortgage broker who is independent and unbiased in giving his advice.

Using a mortgage broker: The introduction of mortgage brokers in Malaysia is ultimately the result of the borrowers' demand for a better level of service and understanding of what is available in the market. Borrowers have been confronted with a wider choice of products and overwhelmed by the aggressive advertisements of the banks and financial institutions. Borrowers are seeking for help in making an informed decision about which loan package is ideal and right for them.

Mortgage brokers are perceived to take away the pain and hassle of the process of researching and gathering information regarding the available loan products in the market. This is ideal for those who have no time to do the legwork in applying for and obtaining a loan and happy to let someone else search for the ideal or right loan for them. It is also ideal for those first timers who are not so familiar with mortgage products and the financial implications thereof.

Future developments: In Australia and USA, applying for a home loan through the Internet has been introduced - a channel which will give the more informed borrower another option. You will be able to apply for a home loan through the comfort of your own home. The entry of Virgin Home Loans and ING Direct into the Australian's mortgage market through the Internet has increased the awareness of this new channel of obtaining a home loan and reflects the extension of technology into the mortgage industry.

Until that reaches Malaysia, the borrowers will have to decide which of the existing options is best for them - go direct or use broker•

Advantages of a Mortgage Broker

1. Some mortgage brokers are not tied to one bank or financial institution and it is in their best interests to secure the right loan for you.

2. Brokers offer a service to borrowers which involves matching a borrower's needs with a loan from the panel of banks or financial institutions of the broker.

3. Brokers provide choices by offering various loan packages from banks and financial institutions.

4. Brokers save you time. A good broker has all the necessary information of the available loan packages in the market and therefore is able to provide you with the various options detailing the loan packages available. This enables you to compare the interest rates, repayment schedules, fees and other features of the various loan packages, eliminating the time consuming process of mortgage research.

5. Brokers simplify mortgages for you. The general public find themselves confused with the various loan packages available and are swayed by the banks' aggressive advertising of the best rates. Worse still, you will not read the fine print and comprehend the shortcomings of such loan packages. Over the years, borrowers have found themselves with a home loan which is just not right for them, leaving them to put up with it or pay huge penalties to get out and take a better deal elsewhere. Brokers will uncover and simplify the process and explain the pros and cons of the loan packages available.

6. Brokers offer impartial and unbiased advice. A bank officer is familiar with the loan packages of his bank only and therefore is not able to offer the best (as well as impartial and unbiased) advice to you. Brokers are able to give impartial and unbiased advice on the pros and cons of each loan package.

7. Brokers services are FOC. The best part of the deal is it doesn't cost you any money! Brokers are paid by their panel banks and financial institutions. The fee payable to the brokers does not increase the interest rates and fees payable by you to the bank or financial institution. You pay the same interest rate and fee, regardless of whether you obtain the loan package concerned through a broker or direct from the bank or financial institution.

Home Loan FAQs