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19 January 2022 | By Lending People

The benefits of a broker—should you get help or go it alone?

If you're weighing up whether to navigate the home loan process on your own or work with a mortgage broker, you can learn more about your options here.

If you’re getting a mortgage for the first time you might be wondering how necessary a mortgage broker is. Lots of Kiwis choose to go down the DIY route (go figure?) and work directly with banks, so is there any benefit in using a broker? Or is it better to go it alone?

What it really comes down to is the leg work and expertise that a mortgage broker offers. If you’re willing to spend the time and energy shopping around, you might be able to secure yourself a good interest rate, but you won’t get the same guidance around mortgage processes or structure.

The benefits in a nutshell

A good broker will find the right loan and lender to suit your unique circumstances, potentially saving you thousands. As well as getting you the best deal, they help you navigate the whole process. Here are some of the other advantages:

  • They have a wide network of lenders: Brokers deal with many lenders (both banks and non-banks), so they can save you the trouble of comparing them against each other. If your application is denied, they may also be able to find an alternative lender quickly.
  • They can help with the paperwork: A broker can help you pull together all the information you need for a mortgage application. They’ve dealt with all sorts of home-buying scenarios, so they know which lenders will give loans for certain types of properties, what to do if there are code of compliance issues, how to structure the terms to give you the best shot at a property that goes to auction—the list goes on.
  • They can help negotiate: Since brokers know the lending criteria of different banks and non-bank lenders, as well as what each is offering, they’re often able to negotiate better terms on your behalf.
  • They can structure your loan appropriately: A good broker will listen to your ambitions and help you achieve them. If you want to pay off your mortgage quickly, they can structure your home loan in a way to help with that.

How can you be sure a mortgage broker is impartial?

For the most part, brokers don’t charge fees but rather get a commission from lenders when they secure a mortgage with them. That raises some questions about how impartial brokers actually are—what’s to stop them from just placing clients with whatever lender offers the biggest commissions?

In New Zealand, brokers are legally required to tell their clients how much commission they will receive. This keeps the whole process very transparent, as brokers have to justify why their lender choice benefits their client—not just themselves.

On top of this regulation, all mortgage brokers must be Registered Financial Advisers. That means they must have a complaints process in place and belong to a dispute resolution scheme. You can check any broker on the official Financial Services Providers Register.

What if you already have a mortgage?

If you already have a mortgage but you’re considering refixing, refinancing, or topping up your current home loan, a mortgage broker can still be useful to weigh up your options, negotiate terms and help structure your new loan in a way that works best for what you’re trying to achieve. If you’re buying an investment property, for example, your broker can ensure your mortgage is structured in a way where only the minimum tax is deductible.

What about the Lending People?

The Lending People are brokers, but not the traditional kind—our process is 100% online, which streamlines everything. You’re still assigned an adviser who will discuss your goals and options with you, then find you the best lender and loan for your unique circumstances. Speaking of which, we work with some of New Zealand’s most trusted lenders—both banks and non-banks. To see what we can do for you, get in touch.

This blog is provided for general information purposes and is not a recommendation you enter into or exit any particular loans or insurance policy. Information on the website does not consider your particular circumstances, including your objectives, financial situation or needs. We recommend you seek advice from a financial adviser before taking any action as appropriate. The Lending People Limited (FSP240365) is a licensed financial advice provider and can provide advice on some types of personal loans. Find out more about The Lending People and how we may be able to help you.

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¹All approvals are subject to responsible lending inquiries. If you sign your loan contracts before 3:00 pm on a weekday, you will receive the funds on the same day. While bank processing times differ, funds usually show up in your account by early evening.

²Annual Interest Rate (AIR) and Annual Percentage Rate (APR): Unsecured interest rates range from 13.90% p.a. to 23.90% p.a.

³Minimum and Maximum Repayment Terms: Repayment terms range from 1 year to 5 years.

⁴Fees: Where Lending People is the creditor, we charge a $174 establishment fee. Lending People does not charge a monthly fee or early repayment fee. Where another provider is the creditor, provider-specific establishment fees, monthly fees, and early repayment fees may apply.

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Representative Example of the Total Cost of a Loan: If you borrow $10,000 over a repayment term of 36 months at an AIR of 14.95% p.a., your total repayments will be $12,631.60 (made up of $10,000 principal, a $174 establishment fee, and interest charges of $2,457.60). This example is based on amortised scheduled weekly repayments with a fixed interest rate for the term of the loan.

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