The process of securing lending can be daunting. Whether that’s for your first home, a land purchase, an investment property, a construction loan, a top-up for a renovation, or whatever you need the funds for, arranging finance can be a deal breaker for some, especially if you don’t know where to start, what you're doing, or at what level you could afford. Having good support from professionals who specialise in property finance is especially important throughout the process, and takes a large amount of pressure off so you can focus on your end goal- to make that next purchase!
A common question we hear as mortgage advisers is "Why should I use a Mortgage Adviser when I can go directly to the bank?" which I believe stems from the misconception that a Mortgage Adviser performs the same job that someone at a bank does. Banks typically analyse a client’s income and expenses, and identify whether they can service the new mortgage/debt and approve or decline them based on their current financial position.
Analysing a client’s financial position to determine whether they can afford the new mortgage/debt is just one aspect of our role as a Mortgage Adviser. We also take into account a client’s future goals and needs, events that could impact their affordability in the foreseeable future, and we consider different finance options in relation to the client’s requirements. Also, if push comes to shove and lending may not work, we try to advise the client on the best options forward for the client to meet their goals and needs.
4 reasons why you should use a mortgage adviser
Economic & market knowledge
Mortgage Advisers are constantly keeping up to date with what is happening in the market and wider economy, as this directly affects the advice they can and should give to clients. Whether this is an economic impact like inflation, or changes to the OCR, global events like COVID, or market specific items like bank interest rate changes, policy changes, or a change in market participants like a decrease in the amount of buyers in the market, Mortgage Advisers are in touch with what is happening at the coal face.
Economic and market changes directly impact the type of advice we, as mortgage advisers can give to clients. These changes may positively or negatively impact our client’s lending capabilities, and in turn, directly affect their lending and purchasing journey.
We need to keep up to date with what is happening so that we can give the best advice to our clients, this is an important part of our compliance under the Financial Markets Conduct Act 2013. Read more on this here.
They have their fingers in multiple pies (banks, non banks & lenders)
Unlike going directly to a bank to secure your lending and only being given options from that particular bank’s loan products and interest rates, a Mortgage Adviser has connections with multiple banks, near banks, and other lenders. This means we are able to provide more options to our clients to suit their specific financial position, needs, or goals. Mortgage Advisers also are up to date with all lenders' current credit criteria, rates, policies and offerings, enabling them to better navigate the space and advise clients accordingly.
A Mortgage Adviser also has the option to approach multiple banks/lenders to obtain multiple offers for the client to choose from. This gives the client flexibility to choose the best offer which suits their circumstance depending on what bank/lender is offering and what conditions are in the loan offers.
A little tip: We would caution you against approaching more than two lenders at a time, as most do complete credit checks which can pull up other recent credit checks completed by other banks. This can reflect negatively on the client as this is deemed as "shopping around" by the client which can be seen as a waste of a bank’s time and resources.
They know what the banks/lenders are looking for
As Mortgage Advisers, we are well versed with what banks and lenders require and how this is best presented to them. This is especially important when approaching main and near banks as they are regulated by not only their own bank policy, but government policy such as the CFT/AML and the CCCFA.
Having someone in your corner who is experienced in the lending environment and who could identify potential causes for concern and mitigate the risk around these, or someone who can identify things which could benefit you as a borrower, is crucial through the lending application process. As always, addressing these up front ensures the best outcome.
A main bank adviser or mortgage manager won't necessarily be able to do this for you.
No cost to you!
I’ll start this one out by caveating that it is not always the case that a Mortgage Adviser won't charge you a fee for their service, however for traditional mortgage advice through a main or near bank, the Mortgage Adviser will generally be remunerated by the bank for their service via a commission payment on settlement.
The service isn’t free, it is, however, paid for by the lender.
Banks or lenders will generally pay a Mortgage Adviser anywhere from 0.5% to 1.5% in an upfront fee and potentially trail income of 0.15% to 0.20% of the total loan amount. You can read more on how we get paid here.
At Lateral Partners, we supply not only traditional main and near bank lending for residential clients/ property, but we also supply services around commercial development lending.
Where there is no commission paid on a transaction, Lateral will specify the fee we charge to clients before we are engaged, which is generally capitalised into the total lending amount and paid to us on draw down of the funds.
In summary
If you are looking to secure finance for your next purchase or project, it's important that you have a no obligations conversation with a Mortgage Adviser. Even if that is just to get an idea or pick their brains about the process, as we do specialise in this field and might be able to identify some things you may not have considered, e.g. government policy, bank policy, economic impacts, and your financial position.
My opinion from working as a Mortgage Adviser is it is better to have a conversation well before you need the finance, as it means that we can address any potential issues along with you and means that we can put you in a strong position to approach different banks/ lenders.
If there is any way in which we can assist or if you would like to catch up for a chat (no obligations) please feel free to reach out to us!
You can also find our specific team members' contact detail here.
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