Recently I had an existing long-term client that I worked with for about six weeks who needed a significant equity release to help leverage his investment property portfolio. It was a complex scenario that had a narrow path to an approval but one that I had confidently solved. However in the space of a weekend he pivoted to another broker based on a quick conversation solely about rate. It didn’t end well for them and they came back to us rather sheepishly and proceeded with our tailored solution.
This got me thinking.
We all want a great rate but we need that rate to suitably match the scenario that will also result in the approval!
The role of a mortgage broker can vary significantly depending who you entrust with this important service. Some brokers act as mere order takers for a product, while others function as true advisors. Understanding the difference can have a substantial impact on your mortgage application experience and financial outcomes. What is the difference, you might ask? Well, let’s explore!
The Order Taker
An order taker in the mortgage industry is exactly what it sounds like: someone who processes requests without offering substantial guidance or advice. These brokers typically follow a straightforward, transactional approach usually based on a ‘best interest rate’ discussion as the focus. They gather your financial information, compare some suitable options, and present you with the ‘best rate’ that comes back. Their primary goal is to complete the transaction as quickly as possible and move on to the next client.
This approach does have its benefits. Order takers can be quick and give you what you want, which might be appealing if you are confident in your understanding of mortgage products. However, it can be costly as they do not take the time to understand your true intentions and ensure that what you are doing currently aligns with your long-term goals. This lack of personalized advice is a significant drawback.
If you’re not well-versed in the nuances of mortgage structuring, you might miss out on better deals or fail to understand the long-term implications of your mortgage choice. An order taker won’t typically take the time to understand your true intentions and will look to execute the short-term goal at the cost of future plans to get a fast turnaround and a quick commission.
The Advisor: A Proactive Approach
In contrast, a good mortgage broker who acts as an advisor takes a much more engaged and consultative approach. Advisors invest time in understanding your overall financial situation, future plans, and risk tolerance. They don’t just process paperwork; they provide tailored recommendations that align with your specific needs to ensure they are putting you on the path to achieving your long-term goals.
Advisors will often educate you about different mortgage products, explaining the pros and cons of each option in the context of your personal circumstances. For instance, they might suggest a fixed-rate mortgage if you value stability and predictability in a rising rate market, or a variable-rate mortgage if you can tolerate some risk for potentially lower rates. They may also delay an application that does not fit with your goals, taking the longer route to ensure you are getting the correct advice and assistance, rather than just the quick result.
Moreover, an advisor can help you think strategically about your mortgage. They might advise you on how to structure your mortgage to pay it off faster with a multiple offset account, how to leverage your mortgage for investment purposes, or how to use refinancing options to manage debt. This level of service often results in a more favorable mortgage experience and can save you money in the long run.
Determining Your Broker’s Role
To determine whether your mortgage broker is an advisor or an order taker, consider the following questions:
- How much time do they spend understanding your financial situation? Advisors will take the time to understand your broader financial picture and goals.
- Do they educate you about different mortgage options? Advisors will explain the nuances of different products, while order takers may just present the options.
- Are they proactive in their communication? Advisors typically maintain open lines of communication, providing updates and advice throughout the process.
- Do they offer personalized recommendations? Advisors tailor their suggestions to your specific needs, whereas order takers might provide a one-size-fits-all solution.
Choosing a mortgage broker who acts as an advisor rather than an order taker can significantly enhance your mortgage experience and financial outcomes. While order takers can process transactions efficiently, so can advisors. Advisors offer the personalized guidance that can help you make informed decisions and achieve your financial goals while also being efficient. When selecting a mortgage broker, look for one who prioritizes understanding your needs and providing tailored advice—your future self will thank you.
