Talk to bank staff and they will normally say “she’ll be right” and plough ahead with a loan inquiry for your application. You see they don’t care about how that may impact on your credit file they just want their figures to look good – they get their salary either way. Why is a mortgage broker different? They don’t get paid unless your loan goes all the way to settlement, so it’s not in our interest to lodge an application unless we are confident that it will proceed to the end.
It might sound contradictory but unless you are careful shopping around for home loans you can damage your credit history. As lenders are very quick to make an inquiry and each inquiry can start to count against you particularly with the large lenders who use ‘automated credit scoring’ or where lenders mortgage insurance applies (LMI).
At the same time it would be a bit reckless to simply take the first offer that a lender makes. So what is the answer – use a licensed mortgage broker.
A licenced mortgage broker will normally have a panel of lenders – a typical panel would be around twenty five lenders and should include a cross section of major banks, second tier banks and smaller member owned lenders. This will give the chance to see a range of features and unless your loan is greater than $1,000,000 the smaller lenders are often more competitive with more personal service.
An experienced mortgage broker will know which lender is offering the best deals and how well they treat their customers. If your mortgage broker appears to be pushing a single product then ask them to explain why and be prepared to get a second opinions – mortgage brokers do not need to do credit checks so should have no impact on your credit history.