As of writing, there is no regulation in the mortgage broker market; in other words, there is no regulated credential, certificate, or license for working as a mortgage broker.
Therefore, the market is completely unmonitored, and anyone who wants to can work as a mortgage broker and offer their service to the public (as opposed to a pensionary consultant or an insurance agent, who must have credentials and licenses recognized by the state).
The mortgage broker’s role
Most clients believe that the broker’s main job is to bring the lowest interest rate to the table, but this is merely a small part of the role; one of the most important duties of a broker is to understand the personal needs and the familial circumstances of each client and to adjust their mortgage accordingly. This includes the following elements:
- Checking whether the deal matches your financial capabilities.
- Examining your present as well as your predicted future financial circumstances.
- Building a mortgage route that matches your needs; since there are many different mortgage routes in the various banks, some better and some worse, choosing the correct route and bank is an important and significant decision.
- Studying your monthly repayment capability as well as the aggregate number of repayments.
The next step – negotiating
with the banks
After building the mix and alternatives of mortgage routes, the negotiation with the banks for the best conditions (for your own personal circumstance) begins. The broker knows how to give you the best interest rates in the current market. Of course, the broker will give you several options of interest rates from different banks; as for you, these options will be better than what you could have gotten alone.
Guiding you through the process of taking a mortgage
Taking a mortgage is a long process – it cannot be done in a day, and might even take several months. The mortgage broker’s job is to stay in touch and help you manage this process (for example, they might help you speed up a certain process that is taking a long time in the bank for one reason or another, help you choose a certain mortgage insurance, notary, etc.).
The difference between a private mortgage broker and one provided by the bank
- Their interests: your private broker’s only obligation is to your personal needs – that is why you are paying them, to maximize your mortgage savings. The broker provided by bank is in the polar opposite position – their only obligation is to the bank, since it is their employer, and their job is to maximize the bank’s profits (since this is a loan, the equation is quite simple – the bigger the interest, the more the bank benefits, and vise versa).
- The interest rate war: the bank wants to sell the money (the loan) for as much as possible, while we want to buy it for as little as possible. A private broker will faithfully fight for your interests when negotiating with the bank, and they will get you the best conditions based on their knowledge of the various possible conditions in the banks.
Availability: the banker will not have the time to learn your financial needs or to dedicate time to build a personal mix and alternatives for you. This is mainly because they don’t have the time required to listen to one client, as they have monthly sales targets of selling to as many clients as possible. Your personal and private broker, on the other hand, is with you throughout the process, and they are available for every need you might have during the long and difficult process. This is mainly because the client is the one paying the broker their paycheck.
After the mortgage
It is very important to check the mortgage and its insurance every few years to see whether it still suits us and whether it is still considered cheap in the new, current interest market.
The bank will not be proactive and perform this examination with you, will not, on its own, check whether the market conditions have changed; after all, they do not have an interest in doing so, as the new conditions will be less profitable to the bank.
A private broker, on the other hand, has an interest in telling you about such changes, in checking whether your mortgage is still good or whether it can be changed and improved upon.
Should you hire a mortgage broker
A mortgage includes large sums of money, and making mistakes or choosing an incorrect route might cost you, in the long term, tens to hundred of thousands of shekels; thus, the personal guidance of a professional, hired by you personally, is incredibly significant.
It is important to remember that in most cases the cost of the guidance is quite small when compared with the mortgage itself, and, in the long term, it looks even smaller.