Engaging a mortgage broker in Singapore can be a significant step in your home loan journey, whether you’re a first-time homebuyer or looking to refinance your current mortgage. A mortgage broker acts as a liaison between you and potential lenders, providing a service that can simplify the complex process of finding and applying for a mortgage.

Table of Contents

• Fees involved for using a mortgage broker
• Difference between going through a mortgage broker and a mortgage banker directly
• Benefits of using a mortgage broker
• Ending thoughts

Fees involved for using a mortgage broker

Fortunately, most mortgage brokers do not charge a fee for the service they provide. This is because all banks pay an equal fee to mortgage brokers, allowing them to maintain a neutral position and provide unbiased advice.

Do take note however that mortgage brokers do not earn anything when a client reprice their mortgage with their current bank, this means switching to a new package but remaining with the same bank. A good broker should be able to advise you clearly on whether it is beneficial to refinance as per this article. 

Difference between going through a mortgage broker and a mortgage banker directly

Eliminating the middleman to get the best deal is not necessarily true for the mortgage industry in Singapore. Distribution costs to the bank remain relatively the same for both scenarios, because even without a broker involved, the bank will still need to pay commission to the banker. And if a broker is involved, the banker’s commission gets reduced. Most good bankers will still prefer to work with brokers because of the volume of business we bring.

The amount of commission earned by a banker is ultimately based on the mortgage product, any deviation to lower the interest rate or include special features will reduce the banker’s commission. Hence, the banker may not be motivated to go the extra mile for you. 

On the other hand, the fee paid to a broker from the banks is simply based on the loan amount, the mortgage package you take up with the bank does impact the fee. Therefore, a mortgage broker will be able to help negotiate for a better rate that works to the clients’ advantage.

As with all businesses, client retention plays a huge role in long term success. A mortgage broker would want to build healthy long term relationships with his clients, and the one sure way to do that is to simply build trust by putting their best foot forward. You may not enjoy this experience when going through a bank directly, where things may seem more transactional. 

Benefits of using a mortgage broker

• A reliable ally that does not charge you anything:
  Know that a mortgage broker will always be there for you, and with you. If you have any concerns regarding mortgage, having a mortgage broker that you trust can be invaluable, as he/she is simply a phone call/text away. 
  
  
• Saves you previous time and effort:
  There are hundreds of packages available in the market, each with their own terms and conditions. In such a fast paced country like Singapore, you may not have the time or energy to source for that perfect package. A good broker will be able to differentiate between getting you a package that you want vs getting you a package that you actually need.
  
  
• Checking on property valuation:
  When it comes to buying a property, the number one question while scouring through listings is probably “Does the asking price make sense?”. This is important because the first step to making a profitable transaction is to ensure that you enter at a good price. Mortgage brokers are able to check valuation with the banks for resale private properties, giving you an edge when it comes to negotiating with the seller. More information regarding purchase can be found in this article.
  
  
• Indicative calculations based on Total Debt Servicing Ratio (TDSR) and Mortgage Servicing Ratio (MSR):
  Before committing to a purchase, it is important to be clear on your loan amount eligibility. This can be done by getting a formal In-Principal-Approval (IPA) from a bank, which is highly recommended to do so. But if you are not ready to take that step yet, a mortgage broker will be able to help calculate the indicative loan amount. If there are certain conditions involved, such as income being derived from overseas for example, a mortgage broker will also be able to advise which bank(s) will likely be able to grant a higher loan quantum. 
  
  
• Maximum Savings:
  Mortgage brokers will be able to help you gain access to lower interest rates which may not be available online. Depending on your circumstances, sometimes the package with the lowest rates may not be the best option for you. This depends on how well the broker does the fact finding before making a suitable recommendation on which option saves you the most money in the short & long term.

Ending Thoughts

What is good and what is bad, every individual will have their own perspective of value. As there are no fees or obligations to consult with a mortgage broker, my recommendation is to speak with a few brokers just to experience different perspectives. From there, you will be able to make a more informed decision with regards to which broker is the best fit for you.

At TLC, aside from the main focus which is providing the best possible mortgage solution. We have created additional loyalty, partner, and referral rewards programs to further enhance your experience with us.

Get in touch today for a non-obligatory discussion.