Using a broker to refinance your home loan

If you’ve been repaying your mortgage for some time, you may have come to a point where you’re wondering if there are better options out there.  

Refinancing your home loan can save you thousands in interest charges, but it does require time and effort on your part - unless you consider working with a mortgage broker. 

A mortgage broker can assist homeowners with the entire refinancing process, from choosing a new lender to helping fill in your application. Let’s explore what you need to know about using a broker to refinance your mortgage.

Is it worthwhile using a broker to refinance your home loan?

A broker is a mortgage expert, and they may be able to recommend you deals that aren’t advertised on the market, negotiate with lenders on your behalf and take care of pesky paperwork where needed. 

For time-poor homeowners, or those simply looking for a helping hand, a mortgage broker may be a valuable resource. 

Save time and effort

When you switch home loans, you have to go through the entire search and application process again. The entire refinancing process typically takes around two to four weeks. This does not include the time it takes to find your best new home loan option and fill in all the paperwork. 

This can be a daunting task for any homeowner, and may make engaging with a mortgage broker worthwhile. While you can be your own mortgage broker thanks to comparison tools, like tables and calculators, this does require much more time and effort than if you had a professional perform this function for you.

A mortgage broker will take stock of your current home loan structure, as well as your financial situation and budget, and go through their rolodex of lenders to recommend suitable refinancing options. Once you choose your ideal new home loan, the broker may then assist you in filling out your home loan application and speak to both lenders on your behalf.

Mortgage broker deals

Some mortgage brokers may be able to access competitive home loan deals that are not advertised, thanks to their strong relationships with banks and mortgage lenders. In some cases, you may be able to qualify for these more competitive home loan deals.

Non-traditional financial situations

It’s no secret that banks and mortgage lenders favour customers with traditional, full-time jobs, making refinancing a challenge if you are self-employed, or a small business owner. This is because you will likely not have the standard identification documentation required for your application, such as payslips from your employer. 

However, you should not be punished for taking a risk and starting your own business or working for yourself. This is where a mortgage broker can come in handy. 

A broker may use their expertise to assist you with your home loan application, as well as use their specialist knowledge to recommend lenders that accept, or even favour, self-employed applicants with competitive interest rates and features. 

Brokers are free

You typically will not be charged to use the services of a mortgage broker - it is generally a free service. Some brokers may charge you a fee as a percentage of the loan when you refinance, but these are rare and far between.  

Brokers are paid a commission by the banks and lenders they recommend you to. Think of it like a lead generation payment for successful applicants. This means you may be able to get expert advice and a personalised service all for free. 

Are there downsides to using a mortgage broker to refinance?

In the past, a less scrupulous broker may recommend a loan based on the commission the bank or lender may pay, as opposed to the benefits of the loan. The good news is that mortgage brokers are now obligated to act in the best interest of home loan customers, thanks to the Best Interests Duty legislation. 

Best Interests Duty requires that mortgage brokers work to prioritise consumers and work in their favour when recommending home loan options, and avoiding any potential conflicts of interest. The scenario of being pushed to a non-suitable lender should be more uncommon nowadays. 

The other factor to consider is that a mortgage broker does not present you with every single home loan option on the market. Their loan options may be limited to the banks and lenders they work with from their portfolio.

This means that a more suitable home loan option could be available that you may only find by doing your own research. Even if you engage with a mortgage broker, it is still worthwhile using comparison tools, like those offered by RateCity, to view a wide range of home loan options and make your own decision. 

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