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For most people, buying a new home involves securing a home loan. And home loans, like any financial product, can get a little bit complex. For good reason, plenty of purchasers turn to the advice of a mortgage broker to assist them with what can be a challenging process.
We spoke with Steve Matsoukas, who’s a Director at Loan Gallery Finance, based in Melbourne, about what a mortgage broker does and how they can assist you with the financial aspect of buying a property.
Steve told us that the best brokers use their financial expertise and deep knowledge of the market to coach and guide their clients.
“Mortgage brokers educate consumers and help them navigate the complexities of the mortgage market. They help consumers obtain a mortgage product that meets their financial circumstances and needs,” Steve explained.
“A broker, typically, has access to over 70 lenders and over 4,000 products. This is an impossible volume of work to research, so clients turn to the broker to provide context on which lenders are appropriate to the applicant’s particular circumstances.”
“Mortgage brokers reduce search and matching costs for consumers by helping them compare deals across lenders. This helps those consumers that are information- and time-poor to avoid the costs associated with expanded choices,” Steve said.
“Based on a customer’s situation, their broker can negotiate a better interest rate prior to applying for approval. The mortgage market is very competitive, and lenders compete against each other for business.”
As for costs, many brokers in Australia offer advice without charging a cent. Sometimes there are fees involved in processing your mortgage application, but brokers generally make their living through commissions: the banks and lenders who provide the home loans pay them for their recommendations.
Steve told us that not all lenders offer the same products or consider loan applications in the same way. And those differences are becoming more pronounced at the moment.
“Now that interest rates are beginning to normalise after the ultra-low emergency settings of the pandemic, lenders are starting to diverge in how they assess applications. You need a mortgage broker to help you navigate this. Mortgage brokers are the experts on what the lenders are doing.”
Since 2022, the RBA have announced five rate rises and foreshadowed more to come to control inflation.
Steve said the reality is interest rates are heading back to an ‘Australian normal’ after the emergency settings introduced during the pandemic lockdowns.
“With interest rates normalising, lenders are starting to diverge in how they assess applications. As a consequence you need a mortgage broker to help you navigate the divergences appearing between lenders. Mortgage brokers are the experts on what the lenders are doing.”
Steve reminded people that the property market is not homogenous, but a series of related segments. “We keep seeing stories about property prices ‘collapsing’ , but this is definitely not the case in the market that we and Satterley operate in [what’s known as greenfield property].”
“Our market is as strong as ever. All we’ve seen in our market is the deceleration of price increases from previous years, not a reversal.”
Although no two purchases are ever the same, Steve says he has seven general steps every home buyer should follow when looking at masterplanned communities: