Mortgage Broker Singapore - How to know if they are good?
A mortgage broker, also called a mortgage consultant in Singapore, provides mortgage advisory and helps you to find the best housing loan packages. This doesn’t just save you time and money; it prevents misunderstandings that can become expensive further down the road.
Why do I need a mortgage broker in Singapore, when there are already mortgage bankers?
A mortgage banker only works for one specific bank; they are obliged to promote only their employer’s loans. For example, a UOB banker cannot recommend that you go to DBS instead.
A mortgage broker, however, is not tied to any one bank. Mortgage brokers in Singapore can compare the home loan products from many different banks, and help their clients find the best housing loan.
After all, in Singapore, there can be as many as 50+ home loan packages available at any point in time. Out of all these, only a handful—often two or three banks—will offer the lowest interest rates. Keep in mind that banks often take turns in offering the most attractive interest rates on a monthly or quarterly basis to gain market share.
Do note that there is no advantage in paying a higher interest rate for your home loan—there are no freebies, loyalty points, discounts, and the like. You will simply end up spending more for no reason.
This is where a home loan broker like DollarBack Mortgage can help you. DollarBack Mortgage is able to compare between 145 loan packages in the market. Our home loan brokers can then recommend the best housing loan package at the time through our network of over 16 major banks in Singapore.
If you prefer to do the legwork on your own, do keep in mind the important questions to ask when choosing a home loan.
Besides finding a lower interest rate, a mortgage broker provides other services to help such as:
1. Finding deals that are not available “over the counter”
Mortgage brokers have a more direct relationship with the banks than members of the general public do. In some cases, they may have been former mortgage bankers themselves, with many years in the industry.
Due to this direct relationship, mortgage brokers can sometimes obtain better home loan rates than would be available to the public.
2. Speeding up your home loan application
A common hazard of any major loan, such as a home loan, is the extensive amount of paperwork involved. An experienced mortgage consultant in Singapore can sift through the paperwork to provide the most relevant details, thus speeding up your loan application process.
For example, salaried workers do not need to fill out as many forms as self-employed borrowers. A home loans specialist will identify the specific documents needed by each client, and bypass the rest.
This also spares the bank’s mortgage department from a deluge of unnecessary paperwork, thus speeding up loan application.
Mortgage brokers can also identify common red flags, such as if you fail to meet the total debt servicing ratio (TDSR) requirements of 60 percent.
3. Advising you on home loan features and types
Some home loans have features that can be advantageous to you.
For example, many borrowers assume that a lock-in feature—a penalty for refinancing your loan—is bad. However, a lock-in might also mean lower rates, and the drawback is irrelevant if you’re not planning to refinance for many years anyway.
Some home loans may include free repricing features that let you switch to another loan package within the same bank at no cost.
Banks are constantly innovating, and a mortgage broker can explain how these features are beneficial based on your situation.
Mortgage brokers can also help you pick loans based on longer-term views. For example, in a rising interest rate environment, they might recommend a fixed deposit (FHR) loan over a more volatile SIBOR loan. The details are too lengthy to explain here, but a home loan broker will gladly walk you through the loan types to help you find the best housing loan in Singapore.
4. Delivering advice on refinancing
Even if you already took your home loan many years ago, a mortgage broker is still essential. For example, you may feel that your monthly repayments are becoming excessive, and there may be much cheaper loans on the market.
A mortgage broker can help you to refinance (switch from one bank’s loan to another), thus lowering your monthly repayments.
There is, however, a cost to refinancing—typically at least $2,500 to $3,000 for legal fees. There is also a risk of switching to a worse package, which ends up costing more than your current package in the long run.
A mortgage broker can help you work out if you should refinance, and when you should do it. They will also help with the paperwork required.
Tips: 8 Tricks For Refinancing
5. Helping to find a reliable law firm
A law firm is engaged in any property transaction. The lawyer’s job is to check through the various deeds and documents, from the Sale & Purchase Agreement to the background of the seller (e.g. if the seller is facing bankruptcy and this could affect the property transaction).
A mortgage broker can help you find a reputable law firm at a fair price (the amount can range from $2,500 to over $4,000, depending on who you engage). They have first-hand experience in dealing with the various firms, and will know which ones are reliable.
Note that a shoddy law firm can cause financially significant delays if they make errors on your mortgage paperwork.
6. Advising you on valuation issues
The Loan to Value (LTV) ratio determines how much a bank can loan you for your house. The LTV is a complex calculation, impacted by your age, loan tenure, credit history, number of outstanding property loans, and other factors.
Home loan brokers can provide advice on how you can get a higher LTV ratio (although this is never guaranteed).
Likewise, they can help if the bank gives the property a valuation that you are not happy with—they can approach different banks using different valuers, for example.
The services of a Mortgage Broker in Singapore are free to you, so there is no reason not to use one.
Your home loan broker will be paid by the bank; there’s no monetary cost to you.
Also, all banks pay a standard amount of fees, so your home loan broker is not inclined to favour one over another. In addition, some home loan brokers—such as DollarBack Mortgage—are able to offer more exclusive rewards to you, just because they don’t face the high operating costs of a bank.
As a home mortgage loan broker is both free and essential (given that a mortgage is probably the biggest loan you’ll ever take), there’s simply no reason not to use one, given the advantages you stand to gain.
Buying A New Home or Refinancing? See how our DollarBack Mortgage Professionals provide comprehensive advisory for your HDB / Private Property Home Loans.