More than 55%of Australians chooses to use a mortgage broker to help them secure a residential home loan. And, there’s good reason for this.
A good mortgage broker helps you secure a loan that matches your goals, your circumstances and your budget, while also helping you save more over the entire course of your loan.
They don’t just look for the loan with the lowest interest. They compare ongoing fees and other costs that may be hidden in a loan, which add to your overall spend. These seemingly simple savings can end up making a big difference.
But, how do you find a good mortgage broker? Or more importantly, how do you find a mortgage broker that is right for you?
How a mortgage broker helps you
A mortgage broker is an intermediary between you and your lender.
He or she has access to hundreds of different loan products and a large panel of lenders. This includes big banks, credit unions and niche lenders too.
Your broker’s main role is to find you a loan that is suited to your needs and circumstances.
Once you choose a loan solution, the broker handles the transaction between you and the lender.
This includes the paperwork and negotiations, from application through to settlement of the loan, when you receive your keys.
A good mortgage broker should also work alongside all the parties involved in the property transactions, such as the real estate agent, settlement agent and builder (if you have one), to make sure everything runs smoothly.
How a mortgage broker saves you more
A good mortgage broker should know the ins and outs of each lender, including their credit policy and other important factors.
For example, some lenders will extend loans to people with only 2 pay slips, others won’t.
A good mortgage broker will know which lender is likely to meet your specific needs and as a result, improve your chances of securing approval.
Where do I find a good broker?
Many people find their mortgage broker through old-fashioned word of mouth, for example, through a friend or family member.
Other referral sources are real estate agents, settlements agents, builders and others in the property industry.
Once you have found a mortgage broker, I recommend speaking with him or her on the phone, or meeting in person, to get a better feel for whether they are a good fit for you.
When you speak with them, ask them these questions.
10 questions to ask a broker before you commit
How long have you been a mortgage broker? What experience do you have?
How many lenders* are you accredited with? Which ones?
Which lender do you recommend the most? Why?
Do you charge a fee for your service, or do you work on commission?
Are you MFAA or FBAA accredited? Do you have an ACL?
Why should I deal with you over a bank or lender direct?
What can you do for me that other lenders or brokers can’t?
Are you available on weekends and after 5pm on weekdays?
Do you work in a specific loan area? For example, construction loans.
Does your service continue once my loan is settled?
If a mortgage broker has difficulty answering any of the questions above, consider other options before making a commitment.
* Capita is accredited with more than 30 lenders, which is more than most major broking companies in Australia.
How do I know if he or she is right for me?
A good mortgage broker should have many years of experience in the property industry.
He or she should make you feel comfortable and confident in their abilities, and in the loan process.
He or she should explain the entire process to you in understandable terms, and be available to answer your questions after-hours.
You’ll often deal with real estate agents after-hours, so your broker should be available to answer questions at these times. (Unlike a bank employee, who is unlikely to be available outside of standard business hours.)
Why not go to a lender direct?
If you approach a lender directly, without knowing their credit policy, you risk having your application rejected, which could harm your credit score in the future.
A bank, or any other kind of lender, only has a limited number of loan products available, which they have an obligation to sell. This means you have less choice.
On the flipside, a mortgage broker compares hundreds of different home loan products, and pinpoints one that matches your goals.
Minimum requirements for a mortgage broker
When vetting a potential mortgage broker, make sure, at the very least, they have these key qualifications and memberships:
Cert IV and Diploma in Financial Services Mortgage Broking.
According to industry regulations, a mortgage broker in Australia must conduct a Preliminary Assessment and Needs Analysis before recommending a loan product.
Once these assessments have been done, and a loan product has been recommended to you, your broker should provide you with a Credit Guide, which outlines the details of the transactions.
The Credit Guide includes the fees, rates and commissions that relate to your loan, and the details of the broker’s company, and licence.
Need a good broker?
You should leave any initial meeting with a mortgage broker feeling confident and at ease. If this is not the case, walk away. Like anything in business and in life, following your gut is one of the most effective ways forward.
Talk to Capita to find a broker that fits you.
Financial Advice Disclaimer: This information is general in nature. Mortgage brokers do not provide financial advice. Clients seeking financial advice will be referred to a qualified financial planner.