Can your mortgage broker get you the best interest rate on the planet? Or will you use a mortgage banker to provide your residential financing? Maybe a non-bank financial institution like a credit cooperation could offer the best rates. Doesn’t anyone get their mortgage from their own bank, anymore?
By: Phoenix Lee/
Seven months after the Monetary Authority of Singapore (MAS) announced the latest housing curbs on property purchases, buyers are taking up lesser mortgage loans, a study by Credit Bureau Singapore (CBS), Singapore’s consumer credit bureau, has found.
The CBS study follows the recent guidelines by MAS in July last year, with the raise in Additional Buyer’s Stamp Duty (ABSD) rates and tightening of Loan-To- Value (LTV) limits on residential property purchases.
The ABSD rates for Singapore Citizens and Singapore Permanent Residents (SPR) purchasing their second and subsequent residential property were raised by 5 per cent for all individuals and 10 per cent for entities. LTV limits were tightened by 5 per cent for all housing loans granted by financial institutions.
Latest statistics based on new mortgage loan applications show that in December 2018, there were 4,423 new applications. This represents a 64.9 per cent decline from 12,619 applications in July 2018 and a 54.0 per cent decline from 9,611 applications in December 2017.
Okay, so what’s the difference between a mortgage broker and a mortgage banker?
In general terms, the distinctions look like this:
A mortgage broker is an independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages. In essence, mortgage brokers know where the money is. Rather than lending their own funds, they lend money from other sources such as banks, finance institutions, and savings and loan associations.
They attempt to find competitive mortgage pricing with the best interest rate from various mortgage companies, insert their markup, and ask for that profit at closing. The theory is that because a mortgage broker has access to multiple lenders, they have the ability to shop for the best rates.
A mortgage banker is different. A mortgage banker is an individual, firm or corporation that originates, sells and/or services loans secured by mortgages on real property. In other words, there are cases where a mortgage banker lends its own money, and other cases where it acts like a mortgage broker and lends money from other sources.
In Singapore, where we have a good number of local and foreign financial institutions, the choice of a lender with best interest rate and its packages can be mind boggling. Imagine having to compare over hundreds of different loan packages and wondering which is best for you. Even if you are a specialist in finance, it is not so straight forward as there are quite a few variables.
That is where the mortgage broker comes in. The mortgage broker is typically an experienced professional who is familiar with the loan approval process and the best interest rate, and having worked with different banks, they know their criteria and what makes the cut.
As they are independent, they will also be able to tell you which lender offers the most suitable loan package with the best interest rate, rather than selling the loan package from the financial institution they represent.
But the bottom line is this – if you can obtain the same loan at the same rate with the same fees, it really doesn’t matter if your loan is brokered or not. It’s not important that someone uses their own money to fund your loan or if they get it elsewhere as long as you get what you were promised.
Which to choose? Just go on the Internet or pick up the phone and contact mortgage brokers, mortgage bankers, financial institutions, credit cooperatives, and any other financing source you can find. See who has the best program for you and see how rates and terms compare.
But be mindful that mortgage brokers are essentially a distribution channel for the loan products of several financial institutions. And a good mortgage broker helps the customers to filter down and shortlist packages, so as to reduce frivolous loan applications. Frivolous loan applications caused the banking system to be clogged up with many bank loan applications from applicants has no wish to take the loan, but simply to “see what the bank can offer”.
Mortgage brokers know what lenders are looking for and are so able to better streamline you loan application process. So, instead of making 5-10 loan applications, the mortgage broker will narrow the choice for you, eliminating those that are not suitable, and allowing you to save time and energy.
How to Secure a Home Loan Quickly
When using mortgage broker services, know that they can set you up on a path that can get you the best home loan meant only for you, in a quick and seamless manner.
Our consultants at iCompareLoan have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home or commercial purchase needs. Find out money saving tips here.
Whether you are looking for a new home loan or to refinance your existing one, the Mortgage broker can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us.
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