Mortgage brokering is still a fairly new concept to many in Singapore. We like to take this chance here in this blog to explain the benefits of using a mortgage broker especially in Singapore. As the name suggests, a mortgage broker is one who helps to broker a deal between a homeowner and the bank for a mortgage and as in all intermediaries the primary objective is to find the most suitable product for the client.
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There are at least 7 good reasons why one should consider using a mortgage broker and by that we mean one who is reliable, professional and ethical. We like to believe we do possess these traits but it is not for us to judge. Rather given a chance we like to prove this to all our prospective clients.
Reason 1: Mortgage broker is on the same side as the borrower
“The board rate has not moved for last 6 years”. “DBS home loan‘s FHR has not risen above 1% in the last 10 years”. “Why worry about the rate if you have this interest offset feature where you will halve the interest you pay anyway? The rate is not important then.”
Ever heard one of these arguments when you speak to the bankers? The first thing one need to understand is that the bankers are essentially salespersons. Yes they are paid a salary by the banks, but they also earn commissions on the sales volume they generate for the bank. And just like in any sales line, there are always targets to meet every month; which creates an inherent old-age problem which most businesses are still unable to solve – sales people peddling products that earn them the highest commission or that which brings the highest profit margin to the company, very often to the detriment of the customer’s longer term interest.
How does a mortgage broker defer in this aspect? Yes one can argue that we are also salespersons but it is a completely different ball game. A good mortgage broker aligns his interest with the long term interest of his client for a very simple reason – he seeks to build trust and credibility so there will be a constant flow of repeat businesses and referral businesses from his base of clients. His allegiance is not to any bank but to his client. In a way you can say that a good mortgage broker operate like a small business owner whose survival and growth depends on how he takes care of the long term interest of his clients. Banks are just too big and too political and being listed companies they often need to make sacrifices for short term profits in order to answer to shareholders.
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Reason 2: A good mortgage consultant is a partner in mortgage planning for the long haul
Chances are the most expensive item one would purchase in one’s lifetime would be a property, especially a private one and in a land scarce cosmopolitan 1stworld city like Singapore. As most people will use leverage for this major purchase, does it then not make good financial sense to have someone take care and manage your “cost of funds” in the long run?
The banker whom one dealt with today after calling the bank directly will most likely not be there 3 years later when the lock-in period for the fixed rate mortgage expires. And even if he is still there with the same bank, he may not be able to offer you the loan package with the best interest and features as competition has caught up. One will most likely have to restart the entire process of search, call, compare and review all over again, at the same time figuring out who or which banker to trust.
Why not have a trusted mortgage broker, who has demonstrated his allegiance is to you as a valued client first and foremost, to work the ground for you in terms of comparing the various packages and latest innovations in mortgage solutions, and advise you what and how to choose the best loan for your next refinancing or even your next purchase?
In fact let us elevate the game and rename the role to that of a mortgage consultant, because that is exactly what we do here at MortgageWise – we give clients our best expert knowledge and advice.
Reason 3: The service is free yet there is no difference in terms of interest and loan features going to the bank direct or going through a broker
Is there really no difference? Yes, we have already explained this in an earlier article on how the mortgage brokering industry work here in Singapore.
There are times however when banks do offer certain extra perks like occasional promotions on their website (free gifts etc), SG50 promotional package, special rates for privilege or premier banking customers of the bank where they do not pay any further distributor fee. In such an instance, some other mortgage brokers may be tempted to hide or refrain from letting you know. But here at MortgageWise we believe in full disclosure and it is up to our clients to decide – and there are occasions where we appreciated how our clients actually decided to go with us in the end and let us earn our keeps as they see the bigger picture in the partnership with a good ethical mortgage consultant.
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Reason 4: Knowledge is power
Internet has changed the rule of the game for many industries and mortgage industry is no different. Comparison sites have sprout up to compare everything from loans to credit cards in many parts of the world. Knowledge is power and as long as the rates are updated, mortgage broker comparison sites save you precious time and effort rather than going to the bank’s site.
Over here at MortgageWise, we also provide a 30-day notification alert service through our e-newsletters when you sign up to our mailing list and we will prompt you whenever a particular bank launches a new home loan packages which we deemed as attractive and when one is about to end its promotion.
Reason 5: You don’t call the banks, let the banks call you
Anyone who has tried to call the banks will know the frustrations involved. After going through all the interactive voice response selections, you get to someone who promised to get a mortgage specialist of the bank to call you back and then – nothing happens. When ones work through a mortgage consultancy firm for his loan, it is the other way around – bankers to call you instead and leaving their mobile numbers with you. Often these are the regular bankers who worked with the respective brokerage firms and trialed and tested over time otherwise they will not be getting as much business or leads from the brokers.
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Reason 6: Work with the best team who works for you
Not only does one access the group of elite bankers when he work through a mortgage consultancy firm for his loan, he also gets extra value-added service like preliminary legal advice on his option during a purchase. Even for home loan refinancing sometimes you might need the law firm to serve a notice of redemption ahead of time and there might be extra charges involved when you do not have a special long-standing relationship unlike the brokers
Reason 7: Its literally pays to work with one
Some but not all mortgage consultancy firms provide tangible rewards when you take up a loan through them. These can come in the form of shopping vouchers or free home contents insurance for example. Some might even offer outright cashback but we caution against going with such firms that dangle cash rewards as very often they have already “built-in” the extra costs of rewards in the price that you pay … After all remember every viable business must be able to derive a decent profit margin after paying off their mortgage consultants for the good work done. People have to make a living in a good career. When companies not doing well start to go into price wars for survival, instead of focusing on quality of service and recommendation, they start to give cashback and look for ways to make more money by sacrificing client’s long term interest.
At MortgageWise.sg, we do offer a Client Rewards Programme where we give Up to $150 shopping voucher. It may not be a lot, but it is our simple gesture of saying thank you to clients who support us in this competitive business, allowing our mortgage consultants to make a living while upholding the company’s principle and philosophy of doing business – build long term relationships with every customer and always put client’s long term interest first before every deal.
We seek to be your mortgage solutions partner and take pride in being able to give truly independent advice sometimes asking clients to re-price and stay with their existing bank if it doesn’t make sense for them to move. We may not get to do business with you the first time round, but we will try again. We strive to be your first choice mortgage partner when you buy Singapore condo. Meanwhile do sign up for our newsletter on our website and stay tuned to this blog as we bring you purposeful and proprietary news summary & insights.