Mortgage brokers have been around for quite some time now, although it is in recent years that they have really started to show up seriously. Above all, they work with private loans, but some also offer help to get a good mortgage. Mortgages are often a bit more complicated and require a bit of negotiation and reflection, so it can be interesting to get help with this if you feel unsure.
A loan broker works in such a way that you submit an application and it is then passed on to a large number of lenders with whom they cooperate, and then these lenders send out quotations to you with the best interest rate and terms for loans. You can compare the offers you have received and choose the loan you think is best. It is then usually private loans that are mediated through them but sometimes even car loans and with a few you can also get help with mortgages.
Private loans and mortgages differ
A private loan is quite a lot easier to compare straight away when the lender looks at certain specific criteria such as annual income, payment notes, loan amount and maturity, credit rating etc. to determine what they can offer. When you apply for a loan through a loan broker, you send in your application and all affiliated lenders look at the application and decide straight away they can give you a loan, what interest rate, etc. You can then choose to borrow or not to borrow.
For home mortgages, this is a little more complicated as it is about negotiating and setting up a large loan in the best possible way. You can negotiate the interest rate and lower it some if you look at the interest rates and you can get interest rate discounts for various reasons, for example if you have collected your finances from a certain bank. For these reasons, you can’t just get a quote straight off for a mortgage.
It is more difficult for loan intermediaries to have mortgages in their offering, precisely because more is required before a final offer for the loan can be reached. They can not only submit your information and credit information and get a direct response with a quote, but must contact the lender to discuss and negotiate.
Some loan brokers provide mortgages
Most loan intermediaries do not have mortgages as part of their offering, and this is certainly to do with the fact that it is more difficult and uncomplicated to offer this. However, there are some players who also offer this service, for example Consector. For it to work, a slightly different process is required than when applying for and comparing private loans with a loan broker.
How it works to apply for a mortgage through a loan broker may vary depending on the loan broker concerned. It may be possible to submit an application in much the same way as when you want to take out a private loan, but you may also have to fill in your contact details and then be called by the intermediary.
Regardless of which method is used, the end result is nevertheless that a personal contact is required between you and the loan intermediary, probably by telephone. This way you can go through the loan, any housing that is to be bought and other things that are important in order to fix a good loan. This personal contact is part of what differentiates between private loans and mortgage loans with loan intermediaries, as private loans do not require the same.
A mortgage has many parts that must be determined
Mortgage loans are, as I said, slightly more complex than private loans. There are large amounts of money to be borrowed for a long time and it requires a lot of preparation and thought. You need to find out how much you can borrow as the most as a mortgage loan (at most 85% of the value of the home) and what you then have to obtain in another way, for example through cash deposit or top loan.
You must also think through if you want variable interest rates on the loan or fix the interest rate. In addition, there are opportunities to tie up part of the loan and have some movable, so as to secure a little while keeping the interest rate lower. There are some such decisions to discuss and then it also applies to being able to negotiate / bargain with the bank and lower the interest rate.
This thing about negotiating the mortgage rate can be a little tricky and many people could have received a lower interest rate than they actually got, if it had been just a little better to bargain on their mortgage. In the past, it was even trickier when the interest rate that you could get differed quite a bit from the interest rate. Now there are demands on the banks to show an average interest rate – an average of what people have actually received for interest lately – which can give a clue as to how high interest rates can be expected.
Have the lender do the job
If you do not feel completely comfortable negotiating the interest rate and finding a good deal, then the loan broker can do the job for you. It is free to use them and they then receive a certain commission from the lender you choose if they manage to pass a loan to you.
Getting this help with talking to the bank can be nice, especially if you are not so familiar with mortgages and what applies. Then it can be nice to have someone with a lot of knowledge and experience who grabs the situation and leads you forward.
However, it should be kept in mind that this is not the only benefit of taking the help of a loan broker. You also have the opportunity to contact several different banks and with the help of the loan broker you can screen among them to find the bank that has the best and cheapest mortgage. You can of course do this job on your own by contacting several different banks but it is a bit more job.
One important thing to remember is that loan intermediaries cooperate with certain selected banks and lenders. They do not contact everyone and you cannot freely want which lenders to join the game. The loan broker only receives their compensation from partners, so it is from those you have the opportunity to get a loan and it is from the range that you can compare loans.
It is conceivable that some banks that you think could offer the best interest rate are not among their partners. Of course, this is not a huge problem but something you should know about. When you contact a mortgage broker to talk about mortgages, you can start by asking which banks they actually cooperate with in this segment.
You can then contact some additional banks yourself if you feel that someone or someone may have a good price on their mortgage but who is not on their list. As long as you have this limitation in mind when talking to a loan broker, you should probably be able to get good help.