A Mortgage Originator can be categorized as an intermediary that takes the all the necessary actions in order to find a home loan for its customers. In South Africa, the home loan market is very competitive and these Mortgage Originators are changing the way home loans are availed by putting the bargaining power back into the hands of the consumers. Just like the Bond Originator, a Mortgage Originator will also submit your application to all the major home loan lending institutions and will also negotiate on your behalf with the bank to get a better rate.
How do they Receive Commissions
These Mortgage Originators receive their commissions directly from the bank and not from the consumer. In some of the deals, these Mortgage Originators, especially in South Africa, have commanded almost 2.5% of the value of house property from the banks. But, this was of course charged at the time when property prices were booming. Now the commission charged is expected to be much lower than this.
Advantages of taking help of a Mortgage Originator
Since these Mortgage Originators deal directly with the Banks, they are more conversant with the internal working mechanism of these institutions and hence they tend to render more objective advice to their clients. On the other hand, if the consumer chooses to directly approach a bank, there is a great deal of likelihood that he may get mislead by the bank, as it is in the interest of the bank to sell more of its own products and services than their competitors. Now mortgage originators work with several banks in tandem and hence they are better equipped to guide the consumers through the best possible deals available in the market.
Post the financial crisis, the markets have become more vulnerable, hence the banks have concomitantly become more cautious about the credit norms. Similarly, the passing of the National Credit Act has increased the administrative hassles for the common man. In this regard, a Mortgage Originator proves to be an invaluable advisor. With the property deals pretty hard to come by, an astute Mortgage Originator would definitely know, after examining the consumer’s financial status and the property he/she wishes to buy, which bank is most likely to agree to finance the said property at the best possible rate.
Interest rate savings
One of the critical factors in securing any loan, including the home loan, is the interest rate offered by the bank. Here the role of Mortgage Originator becomes all the more important. It is the duty of the Mortgage Originator to work in the best interest of his or her clients. That is why the Mortgage Originator is expected to send several applications on behalf of the client to various banks and financial institutions offering home loans. In this way, a Mortgage Originator could be in a better position to negotiate the best interest rates for your home loan. Considering the fact that any home loans often involves large sums of money, therefore even a small difference in the interest rate can result in a large saving on the overall amount on your home loan.