Are mortgage brokers in Australia bad news?

Are mortgage brokers in Australia bad news?

UBS Investment Bank released a report recently, stating a third of borrowers provide factually incorrect information to secure a mortgage. The survey asked 1,228 borrowers in Australia.

A greater proportion of respondents who supplied incorrect data said they used a mortgage broker rather than a bank.

Which begs the question, are mortgage brokers bad news? Let’s start with the survey’s findings.

The survey

  • 1,228 residential borrowers in Australia were surveyed.
  • Only people who had taken out a mortgage in the past 24 months were included.
  • 72% of those surveyed said their home loan application was factual and accurate.
  • 28% said some part of their home loan application was misrepresented.
  • 32% of applicants who used a mortgage broker to secure a loan said some part of their mortgage application was inaccurate.
  • 22% of applicants who used a bank said the same.

Does this mean mortgage brokers are bad?

Okay, we’re just going to come right out and say it. The figures don’t bode well for mortgage brokers in Australia, but it’s also important to note that the survey itself was conducted by a bank and only took in a relatively small demographic of people.

Like any industry, it’s vital to choose the right business for the job. When it comes to finding a mortgage broker; that means doing your due diligence before making a choice.

Here are some tips to help you make the right decision:

  • Ask your friends and family who they have used to secure a home loan, and their experience of the business. Word of mouth may sound old-fashioned, but it’s still one of the most reliable ways to find a product or service provider.
  • Get onto Facebook and see what the business has been rated by customers in the ‘Review’ section. Facebook is a modern form of ‘word of mouth’, and tends to offer accurate insights into a business’ professionalism and effectiveness.
  • Contact the mortgage broker in question and speak to the person you are likely to deal with. You are likely to know very soon whether they are the right person for you.
  • Does the broker ask you questions about your situation and financial goals? A good broker finds a loan tailored to your needs. If they’re not showing an interest in your objectives, they’re not likely to do a good job.
  • Visit their website, and any social media network they have, just to get a feel for whether the brand is right for you. You may find a conversational low-key approach is your style, or maybe you prefer a more corporate approach.

Bank versus broker

There’s a reason why 52% of Australians choose a mortgage broker over a bank – they’re more likely to secure a better deal. This is because a good broker compares hundreds of different home loan products, before pinpointing one or a few that are competitive and match your goals.

In most cases, a bank only has a handful of products to offer its customers. So it’s impossible to know whether you could have secured a more affordable home loan from someone else, with better terms.

It’s also a matter of competition.

A mortgage broker looks at a number of home loan products from bank and non-bank lenders, small and large. They don’t have an alliance with a lender, just a vested interest in getting you the best deal possible.

If they don’t do that, you’re likely to go to someone else. Helping you save more is their absolute end-goal. Of course, finding a good mortgage broker is the key, so when you’re searching, be sure dig below the surface by doing your due diligence.

Should I fudge my mortgage figures?

Let’s get back to the study we mentioned earlier. With a third of borrowers reportedly providing inaccurate data, is this the right way to go? In our opinion, absolutely not.

This is because your mortgage should 100% reflect your situation – that means your assets, liabilities, employment situation, income and other relevant financial stats.

If you’re making numbers up, you’re more likely to find it difficult to repay your loan. That’s a situation no borrower wants to be in, no matter how great a home or investment property looks.

Of course, if you part with your figures and discover a loan isn’t viable for you, a good mortgage broker shouldexplain what is necessary to bridge the gap.

This provides you with a practical plan, which in the long term, means you are more likely to secure a property and pay off a mortgage without feeling unnecessarily stressed.

We never ever recommend pushing the limits of repayments, because your mental health is just as important as your financial health.