In south Africa, ‘mortgage brokers’ can also be referred to as ‘mortgage originators’ or ‘bond originators’.

It's common to think of a mortgage broker as simply a home loan comparison service – an agent who submits a single home loan application on your behalf, to all the banks, and advises you on the offers. This is accurate for part of the service a mortgage broker delivers, but there’s so much more value they can add than this.

Mortgage brokers are experts in home loans - from knowing the various lenders available, to their products, to their policies. But most importantly, they have longstanding relationships with their banking partners, bringing both volumes and experience with presenting applications to credit to maximise chances of approval.

The five essential areas of service you would get from your mortgage broker include:

#1: Pre-Assessment

A pre-assessment can be done one to 12 months before you decide to purchaser a property, and the earlier the better. The pre-assessment involves:

• Checking your credit profile and sorting out any issues on the profile (accounts in arrears, poor scoring or debt review status);
• Offering advice on how to improve your credit score;
• Completing an affordability assessment to advise you on the maximum loan amount you could afford; and
• Advising you on any potential loan amount restrictions the bank may impose due to property type, applicant type, scoring, income type, and marital or residency status; and how to approach these.

Once the pre-assessment is complete and you are satisfied with the outcome, you can ask your mortgage broker to issue you with a Home Loan Prequalification Certificate. Property practitioners may require this certificate before allowing you to view a property, which is particularly common for properties in high demand.

Your mortgage broker can also communicate with the property practitioner on your behalf should you request it.

#2: Preparation

Preparation of your home loan application requires a careful analysis of your personal situation (marital and residency status), affordability, income inclusions, debt exposure and living expenses.

Based on the above, your mortgage broker will be able to advise which lenders, products and lender departments will be most suited to you, or essentially where your application will get the best outcome and rates. They will also advise how to best structure your application to align with bank targets and policies for the best assessment outcome.

Your home loan application should be seen as a carefully constructed presentation of your attributes for the loan. A narrative will be developed by your broker and they will assist you with all of the information and documentation required to support that narrative.

#3: Submission

Submission of your home loan application is done online – a simultaneous application to all the banks via an independent digital platform (called SwitchX) that allows your broker to plug directly into the banking systems.

To save time and queries down the line, the application needs to be complete, with all minimum required documents, and should align as best as possible with bank policies and products you’re applying for. The submission needs to pass the initial quality audit and get to a credit assessor (in the right department) as soon as possible.

#4: Negotiation & Arbitration

After submission, there are two main tasks your broker will be focusing on:

• Negotiation – if your home loan is approved for the amount you requested, and there are multiple offers received, your broker will start negotiations. This is mainly for the interest rate, but they can also negotiate on loan amount, loan term, rate concessions, attorney and other fee discounts and bank rewards; or alternatively
• Arbitration – if your home loan is not approved or approved for a lower amount, your broker will be launching directly into arbitration by going through the bank’s assessment with a fine-toothed comb. It is quite common to get applications that have been declined turned around with a decent and robust motivation.

With multiple offers from lenders, your broker has more leverage to negotiate than your private banker would (with only one offer). Your mortgage broker would typically be bringing more business in for the bank, which would give them priority for escalations and reviews. You can advise your broker on your preferred bank, if you have one, and they can work towards getting the best offer at your bank of choice.

#5: Handover

Once you are satisfied and you’ve accepted a home loan offer from a financial institution, your broker will assist with the handover. By accepting the final offer online, this will initiate an automatic request to the bank to instruct an attorney from their panel to assist you with your bond registration over the new property.

Your broker will communicate with the attorney to ensure they have all the information required from the bank (this also saves you having to provide the same info and documents again).

Once all parties (yourself, the agent, transfer attorney, and bond attorney) have been informed of the bond instruction form your broker, the process is continued in the attorneys space, and you’ll now receive updated from them. However, your broker will be available to assist and advise right up until the registration of the property. They may also be required for any post-grant amendments to the home loan offer (i.e. any changes to the loan conditions after instruction).

How much does a broker cost?

Any residential mortgage broker in South Africa will be free of charge for the consumer. Brokers are paid commission by the banks upon registration of the loan. For most brokers, the commission they receive from each bank will be the same (by design) to ensure that your broker is not financially incentivised to favour any one institution above another.

Use a reputable mortgage broker

Using a reputable broker will ensure you get more value out of this free service – including the full-scale service (as outline above), professional advice, utmost confidentiality and respect with your personal information, speedy approvals and priority with banks.

Phoenix Bonds is a premium mortgage broker in South Africa, with a proven track record (check out the reviews on Google).  For expert advice and personalised service, fill in your details HERE and one of our experienced Consultants will be in touch.