Need a home loan to finance your dream home? Well, you have options of going to banks directly, or finding a mortgage broker to help you out. Here are some tips of how to work with a mortgage broker.
What is a mortgage broker?
A mortgage or finance broker acts as your go-between, communicating with banks and lenders on your behalf, in order to secure the best deal for your circumstances. With approximately 40% of home loan applications being turned down, you can benefit from a broker to ensure that your application is sent to the right lender.
However, while the broker can save you a great deal of running around, you should still double check everything to make sure you are getting the best deal available.
Is the broker licensed?
Before you start doing business with a mortgage broker, check that they are fully licensed. In Australia, it is illegal for credit provider or broker to operate without a license. You can check through ASIC Connects Professional Registers or call ASIC’s Infoline on 1300 300 630.
Before you start doing business with your licensed broker, ask what loans they offer and how they are paid. The broker’s fee is generally covered by the commission paid by the credit providers, although some brokers may charge you a fee instead of commission or on top of their commission. If you are expected to pay a fee, you need to know this before you start doing business. Shop around before choosing a broker, so you are confident you have the best and most cost-effective person for the job.
The broker’s role
Your mortgage broker is responsible for negotiating with credit providers such as banks, to find the best possible loan for your circumstances. They can offer you a range of loan options and help you manage the process of buying your property. Make a list of all your loan requirements, so the broker knows exactly what you need and want. If the broker is making recommendations that do not fit your requirements, do not settle for “not good enough”. Ask the broker to keep looking.
While the broker will save you a great deal of time and money by searching for loan options, you can still do your own window shopping.
As your broker is paid by commission, it is possible they will favour a certain lender over one that has the deal you desire. Alternatively, they might not have connections with a lender who has the home loan deal you want. It doesn’t hurt to look around!
Written loan agreement
Once the broker has secured a loan that satisfies your requirements, you must get a written agreement, specifying the type of loan, the amount of the loan, the term and the current interest rate. It should also cover any fees you are required to pay, such as commissions, broker’s fees or fees to the credit provider. You may also incur fees if you wish to terminate the agreement before the end of the term.
How to make a complaint
If you have a dispute with your broker or any concerns about their professionalism, you can make a complaint by contacting ASIC’s Infoline on 1300 300 630.
Director, Simple Easy Finance Pty Ltd
Property & Finance Strategist