Mortgage Broker Versus Salesperson at a Bank

There's a big difference in the way the two operate, what they can offer you and how they are paid. You should know the differences in their services when you are getting or renewing your mortgage.

What does a Mortgage Broker Do?

A mortgage broker acts as an intermediary between the borrower and the bank or lender offering funds. A mortgage advisers job is to do the following.

• Understand your financial position and your goals for the future.
• Hunt the market for the best mortgage option for you.
• Provide expertise to clients during the home purchase.
• Offer advice on mortgage products and how they fit your circumstances i.e. whether to fix or float or use a combination.
• Tell you what information you need to supply and submit the mortgage application for you.
  

Brokers in New Zealand must be licensed and registered with the Financial Markets Authority (FMA). They must also complete educational requirements to ensure the have the required product knowledge to advise members of the public.

How are mortgage brokers paid?

Advisers are usually paid a percentage commission based on the amount of the home loan. This payment does not effect the interest rate you are charged.

What does a Bank Salesperson Do?

A sales person at a bank has the same role as a broker with one exception. They do not "Hunt the market for the best mortgage option for you". A bank sales person can only offer the products available at their own bank. They seek value for you by knowing you personally and offering the suite of products available from their institution. For example, you may have your mortgage, a savings account, a credit card and even KiwiSaver all with the one bank.

How Do I Pick Which One to Use?

The key here is to first understand that if you are borrowing for buy a home, you are the customer and you have bargaining power. There are often cash incentives for going with different banks and it's worth shopping around to see who has the best offer. There's no harm done in trying both. Any financial adviser should advise you up front how they earn their fees, if they don't, ask them at the beginning. Here's some key tips to help make a decision.

• Regardless of Bank or Broker - having a good relationship with your financial adviser is really important. If you're not comfortable with an adviser, try someone else.
• They should understand your financial position and want to help grow your wealth.
• It's their job to work through the pros and cons with you and explain why a product is or isn't a match to your goals.
• If someone has arranged a mortgage for you in the past and you are coming up for a fixed rate renewal, they should be in contact with you asking if you want any help ... if they haven't contacted you then it's time to look around.
• It does no harm to try different options and see which one fits you best.

Mortgage Broker Versus Bank Checklist

1. Shop around and find a good personal fit.
2. Don't be afraid to ask questions, it's their job to help you.
3. You should receive personal, tailored, professional service that helps you get into a home or an investment.