I was thinking the other day that if I had to choose just ONE professional out of them all (and yes they are all important), but if I had to choose just one, which one do I think would have the biggest impact on newbies building wealth, and I thought it just has to be the Finance/Mortgage broker. These are some of the reasons I came up with: 1) A good broker who knows what your goals are can put in place a financial structure that will support your short, medium and long term goals. 2) Most lenders use different models to determine your borrowing capacity and a good broker will be able to alert you to which lenders will suit your situation best. 3) Published interest rates may not actually be the most cost effective when comparing the varying fee structures of the different banks. An experienced broker can match your circumstances to a lender that will meet your needs best. 4) A good broker will also be up to date with the rapidly changing and complicated choice of finance options and be able to pick out with clarity what is most beneficial for the client at the time and for that particular purchase. 5) Good brokers will also have a great understanding of the criteria on which lenders will assess investment property finance applications and be able to save the client time from approaching the wrong lenders for their situation. 6) Good brokers will be able to advise you on which banks to go to first, second and then so on in order to maximise your ability to keep borrowing and avoid the ' financial brick wall' for as long as possible. This can greatly affect the time it takes, and the amount of wealth created. 7) They sometimes have business relationships with lenders that can influence a decision in favour of the buyer. 8) They can also have better negotiating powers with lenders that buyers may not have. I am sure there are more reasons, these are only a few of the important ones I can think of why Great Mortgage Brokers are probably the most important to a newbie to have on their journey to building wealth.
Totally agree. If I had a great Mortgage broker at the turn of this decade I would have been able to buy that Doonside property on good land right near the station for $325k just a few short years ago.... A great mortgage broker will help you with the strategy and help you to squeeze every last cent out of your borrowing capacity if you need it. Financing errors can really hold you back a long time so a great broker is absolutely vital to keep the portfolio growing!
Correct Gockie. many of them please you with good customer service, on the other hand there is different breed of them who can understand and interpret you vision and lay down the right strategies for a win win situation. Unfortunately my current broker is from the former category.
@Soul Sorry to ask, what is the main difference between a broker and a mortgage strategist? I'm not very familiar with the latter.... Thanks
Mortgage strategist is someone who looks at the big picture, and helps you structure your portfolio to help you maximize your borrowing capacity, and works with what you want to achieve vs someone who looks at your purchases one transaction at a time.
@monalisa Ok, clear. But I still expect a mortgage broker to look a bit further than just the deal is currently work on for me. I guess all the good brokers are 'strategist' as well, or is it just simply a different qualification?
Both do the same and have the same qualification however some of us focus on dealing with investors and look at little further down the investing tree than you average mum & dad broker. Cheers Richard
Absolutely correct @Leo2413. Everyone in your team is important but at the end of the day, availability of finance is the most critical factor in making the most of your circumstances and that all comes down to having someone with the knowledge and experience to move you toward your goals by structuring things right. I'd be lucky to have half my current portfolio if I'd not found an excellent broker early on. Don't overlook the importance of networking with other investors, too. Something I should have done more of, earlier in the piece. Leverage other people's knowledge wherever you can
I would make this very clear to any broker that you use - some do it by default, but they would be the exception rather than the rule. Like Terry, I agree that the brokers who regularly contribute here are more into big picture strategy than one-off transactions.
Its a buzz word a lot of broker groups are using lately Im afraid. For different groups strategist mean different things. For mum and dad PPOR its strategies for repaying debt faster, for FHB its strategies for getting into the market. For people at different life cycles the strategies change. None of that takes away from the importance of having a professional identify your goals and give you strategies to get there. The trouble is a lot of brokers pretend to specialize, in everything. A truly great broker will refer off clients whose goals are different to their specialty, or at the very least explain about their own learning curve. The trouble with lending is its based on confidence. A broker who explains they don't know everything is unlikely to win the business unless they have a lot of integrity.
I used the term Mortgage Strategist to separate the difference between an ordinary transactional broker who just facilitates the loan for a property and a skilled broker who has an advanced level of understanding of mortgages, a forward thinker and can assist you in achieving your investment goals. The following post from Ms Ali sums up the key attributes of a mortgage strategist very well. A GREAT Mortgage Broker is KEY I believe having a great mortgage broker on your side is key! Having dealt with mediocre to great mortgage brokers, if you’re looking to build a substantial property portfolio, I want you to be fully informed about what to look for in a broker. This is what I look for when deciding on a great broker to be part of my team: Figure out what your plan is in terms of purchasing ($ value, time frame, rental yield). Work with the broker based on your income, expenses, assests & liabilities, potential property rental returns to figure out what’s the maximum you can spend. I.e. for instance, say if your income is $70,000-$80,000 (Average Australian Income), can you buy property worth $1mill, $2mill, $3mill and so on? Discuss with the broker to map out up front on which lenders you can use and why (ensure that they are MAXIMISING your ability to borrow as opposed to choosing an easy way out to the quickest lender) If they are unwilling to draw up some sort of a plan to align with YOUR plan then this is concerning Ensure they are not making serious assumptions about your situation and covering all basis Ensure they are responding to your queries in full and that it doesn't take too much probing to get an answer. Succinct in verbal & written communication is a must. Are they willing to think out of the box? They MUST be able to look at the big picture, rather than ticking boxes & churning loans They MUST be willing to cover all basis as opposed to looking at one deal at a time (as an investor you are always looking deal x+1). If they keep brushing aside your plan after IP x then obviously they do not align with your goals (assuming you want to build a solid foundation portfolio and more!) They MUST have an effective content management system in place that they utilise. Otherwise this is not good use of your time and is inefficient As an investor ensure that the broker you choose is able to work past property 5/6/7 etc. as you don't want to keep moving ahead and guessing what’s next for you Last, go with your gut feel on who would be best placed to be your broker. What works for one person may not work for you.
