Why you can bank on a mortgage broker for the best possible loan

Mortgage brokers now command over 70% of the market share of the Australian loan market. A figure that would have been unimaginable a generation ago. But the rise of the mortgage broker to become the dominant force among Great Southern Land’s borrowers should come as no surprise whatsoever given the current state of lending. 

The vast degrees of complexity within today’s loan markets ensure only the most astute, thorough and industrious can navigate the maelstrom to access capital at the lowest available rates.  Clients are constantly looking for advice on how to structure their mortgages or how to manage an existing portfolio which may contain several properties. The level of detail demanded by borrowers is unprecedented, as it should be.

The number of loan products available to consumers has also expanded, which has carved open the market for hosts of new, unconventional borrowers who may have previously fallen short of the bank’s requirements for a loan application. A recent scenario gives a clear insight into how access to capital can be achieved thanks to mortgage broking assistance, where those funds would not be accessible otherwise:

A self-employed client required a loan amount of $3million to purchase their Northern Beaches dream property. The client only had one year’s evidence of financials/tax returns, which restricted the number of available lending options. After exhausting all major and second tier banks, we found the most they could borrow equated to $2.7million. 

After liaising with a non-conforming lender (financial institutions not regulated by APRA), the borrowing power was increased to $3million with only a 20-basis point increase in the variable rate, a 0.20% rise. An incredibly small cost of funds to pay to secure the loan and the dream home. 

Given the various risk barriers applied by the second-tier bank, the customer was more than able to meet the increased repayments offered by the non-conforming lender. In a year’s time, we can then look at refinancing to a more competitive bank, after the client receives his improved financials for FY22. It is obviously vital for consumers to have access to as many lenders as possible, as this ensures they settle on the most competitive product, tailored to their circumstances. This assurance is something that can only be guaranteed by a mortgage broker who is accredited with a panel of lenders. 

Meanwhile, holding discussions with an individual lender is inherently limiting, and a strong driving force behind the 70% share of the Australian loan market being held via mortgage brokered transactions arises from the need to avoid limitations if you’re serious about securing the best possible financing.