Scores of New Zealanders are now turning to mortgage broking firms to do the hard work for them in tracking down a loan. Good Returns asks a couple of brokers how it works and what they have to offer.
Your bank is advertising fee reductions on mortgages, a friend says she's got a good deal from a lender you've never heard of and working out the different loan options is giving you a headache.
That's where mortgage brokers can step in to help you sort through the maze and hopefully find the best deal for your situation. What's more, if it's for a residential loan, it probably won't even cost you anything.
While New Zealand has lagged behind other countries, increasing numbers of brokers are now setting up shop here and are making considerable efforts to give the industry a better image.
Lindsay Hore, mortgage broker with Forsyth Barr, says the advent of Mike Pero Mortgages in the early 1990s began the trend towards larger broking firms and away from people who deal with mortgages as part of a whole range of services - " it's the credibility factor".
"Anyone can call themselves a mortgage broker. So, if you're choosing a broker, you need to ask about their background. Is there some credibility in their experience to offer advice on financial decisions?
"Also ask to see their list of lenders (those mortgage lenders that the broker deals with). They should be offering a range of options, a mix of banks and non-banks. If they're not offering a range, then they're not offering value."
Ord Minnett mortgage broker Clare Pohlen says the value that brokers offer people is through their detailed knowledge of several mortgage lenders' terms and conditions, plus the clout they can have with lenders to get a better deal.
"In some cases, we can get a better deal for the client than the published rates. It's much more noticeable on commercial loans as they're worked out on a case by case basis."
Clare says that sometimes, there are mortgage specials on that sound very attractive to the client, "but that particular loan may not actually suit them further down the track".
"We work through their figures and suggest which package will best meet their needs. We also explain the difference between fixed and floating rate loans and revolving credit facilities if necessary, talk through their options and suggest a good mix for their particular situation."
Clare says that, rather than taking one application to a whole selection of lenders, brokers usually work with the client to determine the best option and then go directly to that institution.
"The reason the mortgage lenders tell us all their terms and conditions is so that we don't waste their time. You don't want to tout clients' applications around anyway, because a lender will do a credit check on them and see that others have done the same, then assume that they've been turned down."
Both Clare and Lindsay stress, however, that it's always the client's decision which institution they deal with.
Lindsay: "Often people want to deal with their own bank. We can go in for them, say that here is a valued customer and what can you do for them".
"It's a leverage point. If we turn up at a bank, they automatically know that the client is shopping around."
And Clare: "People might come in expecting certain rates, going on hearsay or what a friend has told them, but it always depends on their individual circumstances."
