Mortgage Brokers or DIY

[QSLDLC]

Hi,

Looking for advice and opinions on using a mortgage brokers or go bank shopping on my own.

I just got off the phone with a mortgage broker and apparently Kiwibank whom we usually bank with do not deal with MBs so they won't be able to include them in the shortlisting.

They are requesting that if I go with them and on the side to go with Kiwibank on my own, they would charge me $500 to start work. No matter what the outcome is, the $500 fee is fixed.

Is this the usual practice? I can understand if they charge me if I don't end up with their recommendations but it is chargeable even if I go with their recommendations.

So this brings me back to, how much value does it add to the process of engaging a MB? What are your experience in this?

Thanks.

[Keithw]

Depends a lot on how complex the issue is, how many properties, your income etc.

For many years I could just go directly to the bank & organise a new loan using the equity of all properties held with that bank.
But as lending has got harder and they now insist they see the whole picture of all loans across all properties, and in addition your actual living costs rather than "standard living costs", it now makes more sense to use a broker.

In regards to fees, the broker wants to make sure they don't spend their time to get you a deal, only to have you go elsewhere / direct to bank. They are paid by the bank when the loan is made, so I would be negotiating with them (broker) to refund the fee if you go with them.

[QSLDLC]

Thanks Keithw.

Noted the points you have made. Yes, my case is rather complex.

I just had another broker who called and it seems like they operated very differently practice wise. Seems more hopeful than the few doom and gloom ones earlier in the day.

Fingers crossed that it works out.

[brokerman]

Hate doom and gloom merchants, they should not be in our industry!
As a practice we never charge an upfront fee and if KB come up with the goods (which I doubt) then that's the risk we take. We access all other banks and all non bank lenders too so have a complete (Ex KB) range of lenders on offer.

[QSLDLC]

Hi Brokerman,

May I tap on your knowledge, is it true that banks will charge an application fee for commercial loans which is up to 1% of the loan amount?

Thanks.

[brokerman]

They certainly charge a fee, 1% is a bit steep and never upfront.

[QSLDLC]

Thanks! Our first time going into the commercial maze... Hope we don't get too lost!

[brokerman]

Good luck. I have a good mate with KB in commercial if you need help, cost you a good bottle of Spanish Red!

[QSLDLC]

I'll keep that in mind. Thanks.