Have you been watching our 'Getting a Mortgage in Ireland' video series? You can catch-up on the first five episodes on the bonkers.ie YouTube channel. Previous episodes explain topics such as the mortgage application process and the Central Bank's mortgage lending rules.
Episode 6 considers the differences between working with a mortgage broker and working with a bank when shopping for a new home. Enjoy!
MW: Hello and welcome to another episode of our Guide to Getting a Mortgage in Ireland. I’m joined by Dave Curry of the Irish Mortgage Corporation and today we’re going to be discussing what you can expect from working with a broker.
In our previous videos, we covered topics such as the mortgage application process and the Central Bank’s mortgage lending rules and today we’re going to be talking about brokers.
So Dave, there’s a number of ways people can go about getting a mortgage, one of which is working with a broker. So what are the advantages of working with a broker, in your view?
DC: Well, there are numerous advantages, but the main couple of advantages would be number one, independent advice. If you talk to a bank, all they can advise on are their own products, naturally enough, whereas a broker will hold agencies with multiple banks so they can advise on the best bank for you. Secondly, not every bank is going to offer the same mortgage to applicants, meaning the same amount, so you can walk into one bank and they might offer three times your salary, or three and a half times your salary, whereas another bank may offer a little bit more. So a broker will be able to quickly decipher which bank will suit your needs the best.
MW: Ok, in a previous video we talked about the importance of the preliminary screening process when it comes to getting a mortgage, is that something brokers can do too?
DC: Yes, absolutely. A broker will do a preliminary assessment based on your current circumstances, documentation etc, and if they feel that now is not the right time to get the approval or the approval that you want, they will probably advise to hold off for a period of time to correct a few parts of your application and then to make the application to give it the best chance of success. It’s better to wait until the time is right than to make an application and be refused or to note get approved for as much as you would like.
MW: Ok, so you don’t want a backlog of rejections piling up on your doorstep before you actually get approved?
DC: Yes, the first thing that any bank will do will look at a mortgage application, they will see did these people apply to us before, did they apply three months ago or six months ago and got refused, well what was the reason for that. So that certainly won’t help your chances of success.
MW: What are the other differences between working with a mortgage broker and working with a bank directly?
DC: Well, in general, brokers tend to be a bit more flexible, but to be fair to the banks, they’re starting to offer that now. Brokers will meet somebody early in the morning, lunchtime, after work, in their office, in their house, they are generally very, very flexible. Another major, major advantage of working with a broker is ongoing reviews. Every year or couple of years, a broker will get in contract with their clients and let them know is there is a better option out there, is there a new bank, is there a bank with special offers, that it might be advantageous to switch. Naturally enough, your own bank isn’t going to get in contact to let you know that another bank has a better offer right now.
MW: Ok, we’ve listed quite a number of advantages there. Do these come at a cost, if so, what is that cost?
DC: Brokers can and do charge a fee for their service, it’s very important to discuss that up front with them, that can vary depending on the complexity of the application and also depending on the amount of the mortgage because the vast vast majority of the income that a broker earns is from commission which is based on the amount of the mortgage. So, typically a broker might charge up to around €500 for their services. I would say that it’s important that that is only charged on success, meaning successfully obtaining approval in principle, and as I mentioned it’s their income is related to the amount of the mortgage so in some cases the broker will refund the fee after the mortgage has gone through.
MW: Dave, thank you for sharing those details of what someone can expect from working with a mortgage broker. You can watch videos from this series by clicking the links below, we cover topics such as the mortgage application process right up until you put the keys in the door of your new home.
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