Updated: Jul 21, 2021
Over the past few years broker market share has grown in Australia as more people learn and understand how helpful brokers can be in the loan process. However, there are still a few myths floating around so we've decided to de-bunk them once and for all!
Myth #1: Brokers are expensive
Using a good broker will actually help you save money. You get the benefit of knowing you got the very best loan for your circumstances, as brokers are bound by 'best interest duty', and must declare the loan is in your best interest. There is no fee, or hidden fees in brokerage services. Rather, brokers are paid commission by banks when loans are settled (this doesn't affect your rate or come out of your pocket at all). Furthermore, commissions are relatively even across lenders so brokers will not favour one to get more of a commission.
Brokers look at your financial circumstances and goals, and find a loan that fits your specific situation. Thus getting a rate and terms that fit your circumstances will save you money in the long run.
Myth #2: Banks are easier than a broker
When going directly to a bank, you need to fill out all the paperwork yourself and talking directly to the bank every time they need more documentation. This is a long and tedious process. Brokers will also be able to tell you how likely it is you will be approved for a certain product, whereas a bank will ask you to fill out a form, and then deny you if you're not suitable. Using a broker means you can be walked through all the steps and requirements prior to making a decision, and you can compare products across the market.
Myth #3: Brokers only focus on the lowest rate
Many clients see low interest rates advertise and want their broker to get these rates. However, the rate is not always the most important aspect of the loan. Additionally, these advertised rates are almost always only applicable to the most 'vanilla' borrowers; those with strong and reliable incomes, good assets, few liabilities, and good credit history. Brokers are here to help you get your application approved, so they'll look at all aspects of a loan to make sure this happens. A low rate is also not always a priority for clients, they may need fast approval, flexible terms, lenders that do low documentation loans etc.
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