Mortgage originators, unnecessary middlemen or consumer's friend?

For anyone who has purchased a home, the phrase "mortgage originator" may be a familiar term.

Your estate agent, or property practitioner as they are now referred to, may have recommended working with their preferred bond consultant to assist you in applying for finance.

Your first instinct may have been to reject the idea outright as you may have a personal banker you go to for all things loan and banking-related, or you may even consider applying with your bank directly on their own website.

But let's unpack how home loans are handled by the banks a little before we try to answer the topic of this article.

How banks handle home loan applications

Most banks' home loan divisions are independent entities within their business. They are deliberately shielded from the influence of sales consultants and personal bankers so that they can apply lending policies correctly and fairly.

Home loan applications then come into this system through a variety of channels. These include online, branch leads and applications from bond originators.

There is usually a contact desk for each channel that conveys information between the credit department, the consultant, or the client. Requests could include asking for additional details in relation to income, additional supporting documents etc., or they can send decision information about the loan amount, the interest rate offered and any other conditions, or that the application is unsuccessful.

It's therefore apparent that any client making use of a personal relationship or private banker is still part of the same system that a bond originator would have to use.

So where does a bond originator hold the advantage for the customer if, as we've learnt, all things are equal in the process chain? Surprisingly, there is quite a list!

Advantages of using a Bond Originator

1. Originators will assign a dedicated consultant to your application who will not only guide you through the application process, but also pre-assess a client's eligibility for a certain amount of loan. This includes a credit check and affordability assessment.
2. If you have just started property shopping, a pre-approval certificate is a powerful tool that can give sellers confidence in accepting an offer and give the buyer a competitive advantage when competing against other offers. 
3. Bond originators' application technology can be quite advanced and with a single application from a client, up to 7 banks can be requested simultaneously. If a customer had to attempt this themselves, it would be a hugely time-consuming effort to complete each application and submit specific sets of required documents per bank.
4. When multiple offers are received, part of the consultant's job is to negotiate the most preferential interest rate and terms for their clients, and this means negotiating banks against each other for the business.
5. While sellers and estate agents are concerned only with the result of getting a loan approved, a bond origination company that is independent will work to not just get the loan approved but to get the best possible terms for the loan. This can end up saving you thousands of Rands in interest payments over the course of a mortgage bond. That saving, if put back into the bond, could result in months or years off the term!
6. Convenient access to additional and highly competitive financial products such as life insurance, homeowners insurance and more through the originator, assists customers with the cover they need at a time when they may not be thinking about anything other than moving into their new dream home.

Conclusion

In summary, working with a mortgage originator can save you time, money, hassle and more.