In the legal world, there are so many things that many people don’t know about and are left in the dark when seeking support for themselves for many reasons such as mortgage matters, financial issues, or even commercial problems. Of course, not everyone can know everything about the different options of services available for them, but doing some investigation about the assistance you need and the people that provide it, is a step in the right direction.
One such service available to those who are seeking mortgage or financial support in the purchase of property or investment is the finance broker. This article will give you some insight into who they are and what they can do to help you out.
Who a Finance Broker Is
These individuals are the middlemen who usually arrange any financial loans for those looking for one. Because the process of applying for, waiting for, and struggling for, a loan can be quite discouraging, finance brokers offer their help with everything from all of the above and more and are authorities in helping you get financial aid for your future home (or car).
Finance brokers deal with everything from concept to completion, including the lenders, and go through all the paperwork so you don’t need to. They know all the legal jargon and can make it much easier for you in acquiring a loan of most amounts.
👉 Sometimes these finance brokers are called mortgage brokers and they are primarily knowledgeable in helping to sort out most loan types for property or investments only.
If one of these individuals is arranging a loan for you, which is covered by the credit law, they must have a license to practice and operate their business.
Finance Broker Fees
This is something everyone needs to know when deciding whom to work with. There are typically three types of investment brokers.
- First are finance brokers who do not charge you a fee but rather the lender will pay them for introducing you to them and sometimes they also receive a “trailing commission” for the length of your loan.
- Then there are the brokers who only charge a fee to you and do not get any compensation from the lender. They are not as common as one may think due to obvious reasons. They don’t get many advantages out of this.
- And lastly, the third kind of finance broker is one who charges you a fee based on their commission and also gets a trailing commission from the lender, this is the bigger advantage for all parties.
Of course, the advisable ones to work with are those who do not charge you a fee and get their payment through the lender.
👉 As a rule of thumb, if you don’t find a finance broker that does not charge you, the fee will be about 2% maximum of the loan amount being arranged. For example, if the loan amount is $200,000 they would charge you somewhere between $3000-$4000.
Getting value for your money should be your top priority when dealing with these services. Feel free to check what other facilities are available to you. Their main concern should be you, and you alone and they should act on your behalf at all times and so the best advice anyone can give you is to not assume this, or that they will always get the best deal for you.
Some can be motivated only by the commission they will receive from the lender, in which case good or bad deal, they won’t be bothered. This is why you should shop around and see which one fits your needs the best and works most ethically.
Should You Use a Finance Broker
This decision will be entirely up to you, and you could either hire the help of one or none. The alternative is for you to deal with the lenders directly yourself.
There are institutions that can be of good value and who will find a loan that suits your needs and beats the competitive rates of the market, but then there will be others that won’t save you much, and having to do everything yourself may be the cost-effective solution.
Keep in mind, that if you have been having trouble getting a loan from any place you should seek the advice of professionals who may be able to see why that is and find a solution.