Have one of our experienced mortgage brokers help you today for FREE. Just fill out the form below! Buying a house is often the biggest purchase of our lives, and a mortgage is often the largest financial commitment we will ever make. It is mission critical when we are searching for a mortgage that we find the best deal for us that is available on the market.
Mortgages are generally available from most Banks in the market but they are also available from non Bank lenders including insurance companies, credit unions, trustee companies and building societies. There are also ” non conforming lenders” who can provide a loan to people who otherwise can’t get a bank loan because of lack of proof of income or perhaps a bad credit history. These lenders will generally only work through a mortgage broker.
Mortgage brokers a good option for all classes of mortgage, and in New Zealand they help to write around 40% of all mortgages every year. They are a good option for all ordinary householders because they deal across many Banks and lenders, and are in touch on a day to day basis with any deals that are going. They can save a lot of wasted effort for the ordinary householder, and can save a lot of money in the long term.
Mortgage broking has come a long way in New Zealand over the last 10 years, and all mortgage brokers are now required to be Registered Financial Advisers, which also means that they have to have passed difficult certification examinations. All mortgage brokers must also have a complaints process within their business, and they must belong to a recognised dispute resolution scheme. The mortgage broking sector is a far more professional body then it was 10 years ago when there were many cowboys in the industry.
Mortgage brokers are not only useful for the typical homeowner but they are also very useful for property investors in the residential and commercial areas, and for those requiring other loans for example to start a new business or to refinance their existing loans. Mortgage brokers do not charge their clients of fee but instead received a good commission from the lender that they deal with. Banks generally pay mortgage brokers an upfront commission plus an ongoing trail commission, and the profession can be a lucrative one for these successful and smart mortgage broker.
The goal of the mortgage broker is obviously to sign their client up for a good mortgage collect their commission, and the regulations make sure that the mortgage brokers carry this out in an ethical manner and don’t sign up their clients to anything that they cannot afford or is demonstrably not the best deal in the market for that client. Before the current regulations were put in place 20011, there were a large number of cowboys in the market who were happy to stretch the truth on behalf of their clients in order to get them a good mortgage. In the fall-out from the 2008 property crash, a lot of lenders ended up losing a lot of money simply because mortgage brokers get signed up clients who were unable to service the debt or who were very exposed to the falling property market. In many respects these lenders were responsible for their own problems, particularly if they were a second or third tier lender providing finance to investors who were doing property development. The finance was generally supplied at a higher than average interest rate, which appeared lucrative for the finance company but in the end lost them a lot of money when the clients were unable to continue to service the debt. In many instances the losses for the clients and the financial companies was catastrophic, and resulted in personal and business crises from one end of the country to the other.
The new regulations managing the mortgage broking sector mean that the mortgage broker is responsible for properly advising their client, and for making certain that the client not only gets the best deal on the market but is also in a safe position as far as continually servicing the debt. Mortgage brokers are a lot more educated about general financing and their obligations then they were 10 years ago, and are obviously very respectful of the complaints process and the dispute resolution scheme, because if they get something badly wrong it could very easily wreck their business.
For all that, mortgage brokers are still a very good solution for most potential Borrowers, because for a start they are generally hungry for business and will put a lot of effort in on behalf of their client to find a good solution. Because they are exposed to most of me lending products on the market, they are better equipped than most Banks to find the very best deal for their client. Additionally because of their specialist skills and financing they are also in a good position to help the client properly assess the financial risks associated with any loan and to find solutions around these risks.
Mortgage brokers are generally in touch with all of the special requirements that individual banks and lenders have, and are able to find a path through these requirements for a good solution for their client. This may for example involve recommending that a client who is self employed actually goes out and finds a steady job for a few months so that they can get a good earnings history. In a practical sense this might involve a business owner’s life partner finding temporary work, as the business owner may be very confident that they can service the mortgage, but the bank or lender may not understand their business and so won’t have the same level of trust.
The mortgage broker sector has traditionally operated on a word-of-mouth and repeat business basis. This is especially so in the investment community, and good mortgage brokers are generally named and recommended throughout the community. This can be a very lucrative business for a, good mortgage broker simply because the investment community is generally far more active then the ordinary homeowner in terms of buying property. This is the case for both long term and short term mortgages, as while the broker we’ll get a good up front commission and trailing commission for a long term mortgage, shorter term financing is always at a much higher interest rate and so will pay the mortgage broker equally well.
An important role for the mortgage broker is to minimise the risk for their investor client, and they generally do this by spreading the loans around various lenders. What this does for the client is to ensure that if anyone lender tightens up their lending criteria other lenders will probably not be doing the same thing at the same time. The mortgage broker must of course make certain that they have minimised the risk for their lenders, as they stand to lose most of their commission if their clients are unable to service the debt. A successful mortgage broker is able to skillfully manage the risks for the lender and their clients.
The modern mortgage broker who is an expert at applying for loans, and is in a good position to present their client in the best possible light for the lender. They obviously have to make certain that their client will be a sound investment for their lender, and this can take quite a lot of work between the mortgage broker and client. This process will require the client to reveal quite a lot of personal and professional details, and the mortgage broker needs to be very professional in the way they deal with the client and handle this highly confidential information. For commercial clients requiring commercial grade loans and mortgages, the broker will need to be able to understand their clients business to a fairly detailed level to ensure that they fully trust their client and a confident that the client will be able to service the mortgage. This generally requires specialist skills, but the work can be very lucrative for the successful broker.
Most brokers deal with ordinary home owners who are wanting to purchase their first home, or to move into a new home or to just simply refinance their existing mortgage. This is the biggest slice of the market, and there is a lot of competition out there between mortgage brokers, as in most situations the work is technically simple for the mortgage broker but fairly lucrative. Word of mouth and repeat business is still very important for a lot of mortgage brokers in today’s market, and indeed a lot of brokers swear that this is the only safe and secure way for them to operate.
However the world is changing fast, and there is a whole sector of the community that relies on the Internet to find the answers to made your life problems such as how to get a good mortgage. In New Zealand in the average months there are over 9000 searches on Google for mortgage brokers, and by definition this means that there is something like 9000 people who at least need to talk to a good mortgage broker. This is obviously a very big source of new business, and a number of the larger dish mortgage broking firms take this very seriously and do as much as they can to capture this business. The most common approach is for them to spend real money on good web design and SEO to ensure that their company website ranks as high as possible for most Google searches. The importance of this cannot be understated, as only average around 99% of all Google searches end up visiting. Mortgage brokers who have their websites languishing on page 2 wall beyond we’ll see very little new business coming through your website.
The problem for all the smaller brokers is that getting high rankings generally requires spending a lot of money and making sure that your SEO Firepower is amongst the best in the business, and it is generally only the very largest mortgage broking firms they find themselves in this lucky position. This can however be an expensive business, because while ranking your website to attract clicks is a good first step, it is another Step altogether to get customers to actually fill out contact forms on your website. In fact the average completion rate for modern websites that are not absolutely optimised for completion is only around 5%.
This has opened up a unique market opportunity for specialist SEO companies who are able to build a landing page website that ranks High for certain keywords and therefore attracts a lot of traffic. The SEO company can build a specialist landing page, that is optimised to encourage customers to fill out the contact form, and they can then forward these leads on to client mortgage brokers. The good thing is that these are actual hot lead and not just clicks on a website, and if the leads can be forwarded in near real-time then the mortgage broker has a good opportunity to close out the business and gain a new client. This can be a very exciting opportunity for some mortgage brokers, as this new business will generally be ordinary homeowners and so these Solutions will not be technically difficult, and a confident broker should be able to handle it many such Leads during any week. The modern mortgage broker is able to operate securely and efficiently from anywhere in the country, and so they are for example able to take a new client from Kaitaia, and organise a mortgage for them from a lender headquartered in Wellington, and the mortgage broker May operate out of Dunedin. This type of lead generation business can genuinely take market share away from the larger mortgage brokers who are ranking high in Google searches, and can pass this business on to Mortgage Brokers Who Don’t rank on Google but who can be equally competent and efficient.
There are of course a number of homeowners who require personal persistence and attention in order to feel confident and trusting, and they will require that their mortgage broker actually comes and visits them to discuss their requirements and find a solution. There is absolutely no place in the market for this type of client and mortgage brokers who enjoy the sort of work, and this is obviously not possible if the mortgage broker and client are at the other end of the country from each other. However there is a large sector of the population that are happy to work online and remotely from their mortgage broker or other professional adviser, and they may only need an introductory phone call or possibly a Skype video call to establish the initial working relationship and level of trust.