Purchasing a new home can be a stressful experience and most people feel lost in the complex world of real estate. Many struggle to understand what the role of the bond originator is and thus, opt out of using their services which can prove to be a disadvantage. A bond originator is a person or an organisation which sources the bond from multiple lenders, or from your bank of choice. They can act on your behalf and usually work closely with estate agents who receive a referral commission for all bond applications.
The role of your bond originator is ensuring you get the best offer from a participating financial institution. As soon as he receives an offer to purchase from the estate agent, the bond originator will facilitate the necessary home loan applications, obtain the supporting documentation and submit it to the banks of your choice or to all participating institution. In turn, when an offer is provided, the bond originator will get back to you with a choice of offers and institutions.
A common misconception is that if you receive an unfair offer or one that you’re not happy with, you can negotiate with the bond originator. The truth is, however that the originator has no role in the final decisions regarding the grant amount of the interest rate granted to you as a home buyer. When a bank or a financial institution determines the amount of money they are willing to authorise, the two things taken into account are the loan to value ratio (how much money you’re loaning versus how much your home is worth) and your affordability to service the monthly bond repayment.
So, should you use a bond originator? Working with one can bring a myriad of benefits. First of all, the bond originator handles all necessary paperwork which can save you quite a lot of time and hassle. All you need to supply is a proof of earnings and a bank statement, and the bond originator can take it from there. Additionally, they can submit your application to numerous banks at the same time and, as the bond originator has relationships with most financial institutions, this also provides you with a greater choice. If you authorise a bond originator to negotiate on your behalf, they can convince a bank to raise their offer to match a competitor’s – something you’re unlikely to achieve on your own.
Moreover, the bond originator can make any necessary follow-up calls to the banks and most importantly, their services cost you nothing. You don’t have to worry about the quality of service though – the bond originator’s business is based on providing you with outstanding service. If you’re unhappy with the offer you’ve received, you can ask your originator to try and negotiate a better deal.
Some things to be aware of before you start working with a bond originator: make sure your finances are in order. You should not have any poor payment records, judgements or credit bureau listings as they can count against you. Make sure you can provide evidence for your main source of earnings and ensure that your bond originator applies to as many banks as possible – this increases your chances of getting a better offer. Be prepared to negotiate with banks; as already mentioned, there’s high likelihood that a bank might raise your offer if they know a competitor is offering more money but do let the originator use their contact and resources to negotiate you a better deal.