If you’re looking to get a housing loan in Malaysia, you may have considered enlisting the services of a mortgage broker. They can save you a lot of legwork looking around for different housing loans, and handles all the messy parts of your application. However, there will be some minor drawbacks if you choose to work with them.
When it comes to shopping for a housing loan, many homebuyers would hire a mortgage broker, or mortgage specialist to help them find the best loan packages in the most efficient and effortless way.
Hiring an experienced and competent broker can help you find the right mortgage that you’re most eligible with and best suits your affordability, they will even have your loan application sorted out - fewer worries about your loan getting rejected!
What’s A Mortgage Broker?
A mortgage broker is an intermediary that helps people get mortgages, by connecting them to lenders who best fit the borrower’s financial needs.
They're also responsible in processing the relevant paperwork by collecting them from the borrower, and passing it to the lender for underwriting and approval.
After everything is done, the broker then receives an origination fee from the lender when the loan transaction is successful.
An origination fee, or discount fee/point, is a payment for originating a loan. It’s usually between 1% to 2% of the loan amount. For example, a broker gets RM5,000 if a RM500,000 loan is approved.
What Does A Mortgage Broker Do?
A mortgage broker will gather various loan options from different lenders for your consideration, while at the same time pre-qualifying you for a mortgage.
The broker gathers important documentation such as your income, asset, and employment record, and credit reports. These will be used to assess your ability to repay your debt.
The mortgage broker will also help you figure out the appropriate loan amount, loan-to-value ratio, and your ideal loan type before submitting the loan application to a lender for approval.
What’s The Difference Between A Mortgage Broker And A Bank’s Mortgage Officer?
The main difference between a mortgage broker and a bank’s mortgage officer is that the bank officer will only represent the bank’s products, while a mortgage broker works with multiple lenders and has access to a wider range of products.
This also translates to other differences in terms of your available options and the service you’ll get.
1. Available Loan Options
Since mortgage brokers work with many different lenders which includes major banks and private funds, they might have access to better housing loan interest rates.
However, the number of lenders a mortgage broker has access to is limited by whether or not they have approval to work with each lender.
In addition, some lenders work exclusively with mortgage brokers for certain loan products, which would give you access to loans otherwise unavailable to you.
2. Quality Of Service
Brokers work with a few borrowers at a time, and since they don’t get paid until a loan transaction is made, they’ll have a greater incentive to work on a more personal level with each borrower.
Bank mortgage officers, on the other hand, work with many borrowers and may keep you on hold for quite some time.
Also, you should take note that if a loan that originates through your broker is declined, your broker can apply to another lender; if your loan originates through a bank’s mortgage officer, no further action will be taken if it’s denied.
On top of that, brokers might be able to get lenders to waive fees associated with the loan application - something that a mortgage officer can't do.