When should you talk to a mortgage broker? Hint: it may not be when you think

The majority of property hunters find a home first and only contact a mortgage broker to secure the cheapest loan. But one expert says tapping in your broker at the right time could end up saving you tens, even hundreds of thousands of dollars.

Clarity Home Loans mortgage broker Shanice Briones says that depending on your circumstances, getting a mortgage broker on your side early can mean the difference between a seamless transition and chaos – you just have to ask yourself the right questions.

“What are your current circumstances? What’s your goal and how do you plan to get there? Is this your first home? How well do you know the market? How well do you know the processes involved in what you’re trying to achieve?”

Shanice says it’s not uncommon for clients to run into trouble when trying to execute a simultaneous sell and buy.

“A lot of people think it’s an easy thing to do, and logically, in their head, one comes after another. But it’s usually quite complex to get from one property to another, especially when you don’t want to rent somewhere in between,” she says.

“Getting those things to line up perfectly is fraught with danger.”

The biggest risk in a simultaneous sell and buy is coordinating the settlements.

As Shanice points out, even if you do manage to pull it off, if the buyers of the property you’re selling default or fail to complete their purchase on time, so do you.

“That means you’re not only risking the completion of your sale, but of your purchase, too. That’s when things can get messy and costly,” she says.

“You risk forfeiting your deposit, which is tens or even hundreds of thousands of dollars.”

Contrary to popular belief that mortgage brokers are there solely to secure loans, some brokers are specialists in the whole process – well-versed in the pitfalls and possibilities, and will happily hold your hand throughout.

This can seem particularly important when there’s a time crunch, but it’s best done before it gets to that.

“At Clarity, we first get an understanding of our customers’ circumstances and goals and then explain to them all their options to get there,” Shanice says.

“They might not understand, for instance, that securing a bridging loan between a sell and a buy can not only take a great deal of stress out of the experience but could see them financially better off in the long run. Coming to us early, understanding your options and going in with a plan means you can avoid that time crunch where you may potentially feel pressured to sell your property for less than it’s worth.”

In the current market, with banks being more conservative and property prices plateauing, Shanice says bridging loans are increasingly difficult to obtain.

“Towards the middle of last year, I saw an increasing number of clients who didn’t qualify for bridging loans and couldn’t afford to turn their existing property into an investment, so they had to go down the simultaneous buy-and-sell path. We were able to explain how it would work, got them talking to a solicitor who introduced a lease-back option into their settlement so that they could lease their current home off the buyer until they were ready to settle on a new purchase,” she says.

“There are many methods of moving from one property to another. Sometimes you have multiple options, sometimes due to circumstances, you’re limited to one. Understanding the logistics of that to make the right decision for your specific financial situation is important.

“The sooner you know, the better. That’s why we encourage people in any situation – not just buying and selling – to talk to us first. We’ll help you set realistic expectations, eliminate stress and make sure you know what you’re in for.”

For more information, contact Clarity Home Loans.

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