The Complete Guide to Working with a Mortgage Advisor

What does a mortgage consultant do?

In one sentence, the role of a mortgage advisor is to get you to sign on the The best mortgage for you.

A question I encounter a lot is why mortgage advisors are needed.

First of all, you don't need a mortgage consultant! Thousands of people take out mortgages every year without private mortgage consulting. There is no law requiring mortgage consulting. But... if not a mortgage consultant, then what?

Even someone taking out a mortgage alone will meet with the bank's mortgage officer. The bank's mortgage officer is a salesperson, not a mortgage advisor. I have a whole article about Mortgage bankers and what's the problem with them.

In short: the one who pays their salary and whose interest it is to look after them is the bank, not you.

When to approach a mortgage advisor?

A private mortgage consultant will likely always recommend coming to them. Even before you start looking for an apartment. The idea of consulting before starting the search is, of course, that the search will be within an appropriate purchase budget according to Your actual financial conduct.

An independent mortgage advisor can also say things like, "On the face of it, you can afford the mortgage, but in my personal opinion, this apartment is too big for you and you should look for another apartment.".

Banks often won't schedule an appointment with you at all Before a purchase agreement was signed.

Definitions like "40% of your salary can go toward your mortgage" are meaningless. These definitions are designed to allow the bank to screen customers quickly and at low cost. The bank assumes that a few thousand people a year will default on their payments, and that’s okay. If you don’t want to be one of those thousands, the first step is to seek financial advice on buying a home. 

After completing the stage Mortgage planning, Your mortgage consultant will save you a lot of time and frustration by gathering the necessary documents, preparing them, submitting them to the relevant banks, speaking with the bankers in their language, and ultimately, in all likelihood, will save you both significant time and secure better interest rates for you. 

What to bring to the first meeting?

For the first meeting with a mortgage consultant, I would like to bring:

• Net income data from all sources.
• Existing property data, if any.
• Data on all types of savings (securities, study funds, and others).
• Loan Data: Current Debt, End Date, Monthly Payment.

These details will help the mortgage consultant better understand your financial history and tailor their advice to you.

How to know you'll get the best interest rates?

A question that is asked many times is "How will I know you've brought me the best interest rates?" The answer is simple. You have no way of knowing. A consultant who promises you this, I suggest you don't choose them.

The same way, if you were to ask me if you run 1000 meters faster than me, I would answer – I don't know. But... if you hear that I run 10 km every week and you know that you don't do that, then Likely That I am running faster than you.

Similarly, I don't know how you negotiate, nor do I know what you will achieve with the banks. I do know that in general, a person who performs a certain action several times each month is likely to achieve a better result than someone who does that same action only once or twice in their life. 

How to choose a mortgage advisor?

In my experience, one of the things that greatly bothers people is choosing a professional in fields where there is no official government standard. So yes, anyone who finished the army can get a business card as a mortgage advisor.

Some people told me that because "anyone" can be a mortgage consultant, they won't hire one at all. I find that strange. If you know that falling off a cliff is dangerous, then the solution could be to not go near the cliff (and not take out a mortgage), but going near the cliff with a lead weight tied to your leg seems like an unsuccessful policy to me. 

Just because anyone can be a mortgage advisor doesn't mean you should choose "anyone." You can get recommendations from friends and family. You can set criteria for your future consultant. For example:

• Are you concerned that anyone can declare themselves a consultant after their military service? What's simpler than setting a rule of accompanying at least 20 mortgages as a criterion for selecting a consultant?
• Do you think financial literacy is important for a mortgage advisor? Ask the advisor if they have a degree in economics or what their general education is.
• Is it important for you to know who the person is and what their economic outlook is? Do a Google search. See if they are active in groups, whether their website or Facebook page talks about how great they are, or if there is also quality content there, and so on.

In today's world, it's much easier to wonder about each person's intentions.  

Do you know why bank branches used to be luxurious with marble and heavy furniture? In the world without regulation 500 years ago, when the first banks were established, the public constantly feared that the bank would disappear with their gold. An invested branch with marble, etc. would only be built by someone who planned to stay for many years.

If the advisor you went to cannot invest a few thousand shekels even in a website and does not maintain an online presence (which consumes far fewer resources than branches with marble floors), then perhaps they are just "checking the waters" to see if being a mortgage advisor is a good fit for them. I would not want to be the client on whom someone is "checking the waters.". 

How much does mortgage consultation cost?

Economic consulting for purchasing an apartment typically costs between 2,000 and 4,000 shekels. I do not consider a free consultation meeting as consulting, as a free meeting is essentially a sales pitch, not actual advice, in my opinion. In a free meeting, you generally won't receive an answer like "You shouldn't buy." At most, you might hear, "You cannot buy.".

Negotiating with banks typically costs between 2,000 and 6,000 shekels, with additional charges for complex transactions. Therefore, a comprehensive service should cost between 4,000 and 10,000 shekels. All prices include VAT, of course. 

What does the price depend on?

Let's talk about one-time consultations versus a full process. People aren't aware that there's an option for a single meeting to check the feasibility of a mortgage at all.

It is difficult to talk about the price of "mortgage consulting" without first talking about the essence of the consulting. Different consultants define consulting differently, and thus, in addition to price differences stemming from experience, reputation, education, etc., as in any service, there are also differences stemming from the definition of consulting.

When I buy an air conditioner installation, the requested service is clear – a cool room after an air conditioner installed by the installer is running inside. In mortgage consulting, there are different definitions. Some consultants perform a complete process of building a financial plan long before searching for an apartment to ensure that the apartment being purchased will meet the family's goals.

On the other hand, there are consultants who do not accept clients at all before there is a contract. Some of them do not even meet clients but are content with filling out a digital form with basic data requested by the bank, and based on that, plan the family's financing plan. These consultants actually work in a way quite similar to how the bank operates, except for the fact that they approach several banks so that within the same mortgage plan, they can be brought to a lower price (interest rate). 

The first thing to do when reviewing service prices is to ensure we are comparing the same service. It's okay to decide that a financial plan isn't important and to be satisfied with filling out a form, and then have a consultant arrange a low-interest mortgage for us. It would be a mistake to choose such a consultant for a lower price and ultimately forgo personalized advance planning, even though in most cases this is the truly significant part of financial advice for purchasing an apartment. 

Another thing I suggest doing (always) when discussing the price of a service is to make sure it's the final price. For example, I distance myself from those who give me a price and only "remember" to add VAT after I explicitly ask. I also distance myself from those who tell me to come for a free meeting and we'll discuss the price in the meeting. There's no such thing as a free meeting. My time is not free, and I prefer to make a decision about a service in a considered way, not under the pressure of a meeting and a scrutinizing gaze. 

When do you pay a mortgage consultant?

Each counselor has their own payment collection method. Beginner counselors usually charge a small fee at the beginning of treatment and the main fee at the end of treatment. More experienced counselors usually require a payment arrangement at the beginning of treatment.

I am intentionally writing "payment arrangement" and not "payment" because if, for example, you paid by credit card in 8 installments, the business owner will actually receive the full payment in 8 months, long after the treatment is completed. 

Remember that a mortgage is an ongoing transaction, not a one-time deal.

A common mistake is to use a mortgage advisor, or better yet, a financial advisor, to finalize a property purchase with the right financing. However, a mortgage deal doesn't end when you take out the mortgage, but with the final payment, say, ten to thirty years later. I highly recommend checking with the advisor about their future support in reviewing and making future changes to the mortgage through Mortgage Refinancing Or early repayment of a mortgage. A common mistake is to think that repayment and refinancing are the same thing, but that will be covered in another article.

In summary