Why Mortgage Brokers Get You The Cheapest Loans

I’m a little tired of people who listen to bankers or property agents, then complain to me about how bad their loan situation is. That’s like getting life advice from a convicted felon, then acting all surprised when you’re eating baked beans in the Changi Prison canteen. I’ll say it again: Property agents and bankers do not have your best interests at heart. Most lack the compassion to nurture bacteria, let alone your well being. In this article, I look at why it’s mortgage brokers who get you the best deal:


Woman on the phone

Why did you go to that bank? I mean, you didn’t check “moron” for your background.


Why Do Bankers Give You Bad Deals?

Let’s start with the obvious. Bankers get a commission when they sell you a home loan. A percentage of your loan value goes toward their bonus; because apparently, being paid $4000 – $5000 to sit on their asses and answer phones all day isn’t enough.

So let’s say I work for the International Bank of Rip-Offs. My bank’s home loan interest rates are astronomical; maybe the worst in the country. But if you come to me and ask for a home loan, would I turn you down? Am I going to say “I must be honest. DBS or HSBC has a better rate”?

Yeah, when cows crap gold I will.


Smiling phone operators

These are the cheapest rates you’ll find. Assuming you have no phone, computer, TV, and can’t walk.


Every banker will tell you she’s offering the best rates. Even if she’s not interested in her commission (in which case she’s the Mother Theresa of finance or something). Her boss would chew her out. Employees, as a general rule, are discouraged from telling customers that “Our company’s financial product is crap, go somewhere else”.

Now, of the 12 local banks offering loans, just one or two will have the cheapest rates. And every month or so, the situation changes. So this month DBS may be the cheapest, next month it could be Bank of China. But the banker is not going to explain this to you.


Okay, How Does My Property Agent Come In?  

Banks pay a referral fee to property agents. When your property agent refers you to a banker, and you agree to go through that banker, your agent gets paid.

As such, property agents and bankers work hand-in-hand. Your agent has a vested interest in having you use “his” banker, because it means extra money for him. If you find your own home loan, or go through a mortgage broker, your property agent won’t get the referral fee.


Rock, paper, and scissors

Don’t worry, our property firm has a great way to pick bankers for you.


Since loan repayments don’t affect the price of your house, your agent has little interest in finding you the best deal. He just wants to get his referral fee asap; that involves pointing at the first banker in his phone book.

In short, your property agent may not care that you get the cheapest loan. It takes time and effort to compare loan rates, and the agent has little reason to bother. Whether he gets you a cheap or expensive loan, he still gets the same referral fee and commission.

And maybe you can empathize with your agent. There can be over 100 home loan packages on the market at any one time. To make sense of it all, you need to…


Get A Mortgage Broker

A mortgage broker’s sole job is to compare home loan packages. He just stares at the changing rates all day, until alcohol or boredom drives him to an early death. Even then it could be weeks before his colleagues notice.

If you go to a loan comparison site (like SmartLoans.sg), these brokers are the people who’ll call you. And they’ll find you the better deal because:

  • Information is their sole product
  • They have a wider view of the market
  • They are not biased toward any bank


Empty beer bottles

Pictured: Mortgage broker in natural surroundings


Information is Their Sole Product

Mortgage brokers don’t sell houses. They don’t sell loans. They sell information. It’s their one product. And they can’t make a living if their only product turns out to be crap.

Yes, mortgage brokers get the loan referral. But beyond that, the broker counts on you to go around saying: “Hey, this guy’s information / advice is up-to-the-second. He saved me a bundle.”

This is different from bankers and property agents, who either don’t care about buyers’ ignorance, or actively profit from it.


They Have a Wider View of the Market

Most bankers only know their own rates. Even if they knew others, they wouldn’t tell you. And don’t even get me started on property agents; asking your agent for loan advice is like going to a bakery to buy a steak.

Your property agent might know one or two good deals. They might know the best deals from last April. But when you start asking for no lock-in or high Loan-to-Value packages today, most just shrug. And say something like:

“I dunno, I guess random banker #64 would be good; he has a really nice tie. Just put my name in the referral bracket okay?”

If you want the widest, more current view of the market, you need a broker. Hell, even property agents and bankers call brokers for information. Why shouldn’t you?


Guy looking through binoculars

And also, that banker’s socks are orange. He’s probably an ass.


They Are Not Biased Toward Any Bank

When you use a broker’s services, there’s a nice big chart showing you the alternatives. All the results are aggregated on one page, and a single phone call will affirm the rates you’re quoted.

As such, brokers are more inclined to point you at a decent bank. They get nothing but customer complaints if they pick a bad bank or lie. Contrast this with bankers, whose bonuses depend on a sort of “lies per second” gauge.

So find a broker. If you’re taking on the biggest loan of your life, you can spend an extra 10 minutes calling one. Most of them don’t even charge for their service; SmartLoans.sg, for instance, is free.

Image Credits:
Jerry Bunkers, Jerry Bunkers (second image), Ecstatic Mark, SFB579:), gerlos,

Have you ever used a mortgage broker? Comment and let us know!

Get more Personal Finance tips and tricks on www.MoneySmart.sg

Click to Compare Singapore Home Loans, Car Insurance and Credit Cards on our other sites.

More From MoneySmart

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • ‘Taklub’ wins jury prize in Cannes
    ‘Taklub’ wins jury prize in Cannes

    The Yolanda-inspired film “Taklub” has won a special award at the Cannes Film Festival in France. The advocacy film, which had a successful premiere last Tuesday under the festival’s Un Certain Regard section, is directed by 2009 Cannes best director Brillante Mendoza and top-billed by Nora Aunor. The award cited the film’s sensitive portrayal of individuals and communities in the Philippines fighting to continue living despite natural disasters exposing them to suffering and death. …

  • Orphan tops chemical engineering board exam
    Orphan tops chemical engineering board exam

    A 21-year-old orphan from Capiz topped the chemical engineering board examinations held this month. Remington Salaya, a cum laude graduate of the Central Philippine University in Iloilo, ranked first in the board examinations with a score of 83.30 percent. Out of 405 chemical engineering graduates who took the exam in mid-May, 239 passed. …

  • A sunset party for APEC delegates
    A sunset party for APEC delegates

    Greeted by the beat of Ati-atihan drummers, delegates of the Asia-Pacific Economic Cooperation trade ministers meeting enjoyed a welcome dinner and cultural presentation at sunset yesterday. Dubbed FuntaSea, Shangri-La Boracay Resort and Spa’s Banyugan Beach was transformed into a fantasy island, complete with mermaids, fire dancers, and choreographed paraws (sailboat) representing the best of Boracay. With APEC meetings being held all over the Philippines, each presentation is conceptualized …

  • UN chief urges peaceful solution of sea dispute
    UN chief urges peaceful solution of sea dispute

    United Nations Secretary-General Ban Ki-moon called Friday for a peaceful solution to territorial disputes in the South China Sea, where China’s increased assertiveness has alarmed its smaller neighbors. In Manila, Presidential Communications Operations Office Secretary Herminio Coloma Jr. appealed to China to respect various international agreements on freedom of navigation and aviation. Coloma’s call came in the wake of an incident Wednesday where Chinese naval forces warned a US …

  • Phl seeks transparency, inclusivity in Asean-China Center
    Phl seeks transparency, inclusivity in Asean-China Center

    Philippine Ambassador to the Association of Southeast Asian Nations Elizabeth Buensuceso has called on participants of the ASEAN-China Center (ACC) brainstorming session to vigorously work on promoting ASEAN-China relations under the principles of inclusivity, transparency and centrality. The brainstorming session, attended by the ACC’s joint council and joint executive board members, also involved a midterm review of ACC’s work since its establishment in 2011. The ACC aims to promote …

  • Lebanon tightens rules on HSW repatriation
    Lebanon tightens rules on HSW repatriation

    Distressed Filipino domestic helpers in Lebanon may find it more difficult to return home. The government of Lebanon has tightened the rules on repatriation of distressed household service workers (HSWs), Labor Secretary Rosalinda Baldoz reported yesterday. Citing a report from the Philippine Overseas Labor Office (POLO), Baldoz said the Lebanese government opted to re-impose a previous policy requiring investigation into every case of HSWs who ran away from their employers and sought …

  • Army execs face attrition over promotion quota
    Army execs face attrition over promotion quota

    Dozens of Philippine Army officials may be removed from the service due to a promotion quota system in the Armed Forces of the Philippines, according to AFP chief Gen. Gregorio Pio Catapang. In a letter to Defense Secretary Voltaire Gazmin, he requested that the 30 percent promotion quota – which means that only 30 percent of those eligible for promotion in a given year will actually be promoted – in the Army be raised to 50 percent. Under the military’s attrition law, middle-grade officers …

  • Philippines backs support for small enterprises at APEC meet

    MANILA, Philippines (AP) — The Philippines' top trade official on Saturday called for support for the integration of micro, small and medium enterprises in global trade, which he said would help reduce poverty and inequality in the Asia-Pacific region. …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options