Finding a good mortgage broker is now more important than ever
A mortgage broker’s job is to help you get the right loan. However, not all mortgage broker are the same. It is up to you to select the right mortgage broker.
Basically you need to do your due diligence about any professional that you plan to use assisting you to purchase a property or when dealing with a large sums of money.
Purchasing your home or an investment property is most likely to be the biggest purchase in your entire life. Making the wrong choice of mortgage broker could cost you thousands of dollars!
Due to the complexity of the finance market, when getting a home loan a mortgage broker now is considered an essential part of your team. Now more than ever more people are using a broker when comparing and obtaining a home loan. In fact data from the Finance Broker Association of Australia – FBAA suggests that more people are not using a mortgage broker that going direct to the bank and that the number of people using a mortgage broker is steadily increasing.
But what does a mortgage broker do?
Essentially, you broker acts as a intermediary between you and the banks and lenders. A good mortgage broker will have access to a wide range of loans through a wide panel of lenders that they are accredited with. A good broker’s main objective is finding you the most suitable loan for your objectives and circumstances. This will also relay on you making sure that you provide your broker with what your need or objectives are.
Under the National Consumer Protection Act 2009, under ‘responsible lending’ requirements, mortgage brokers have a legal obligation to ensure that the loan you are getting is not ‘unsuitable’ for you. Your mortgage broker must give you a Credit Guide (with information including their licence number, fees and details of your right to complain) before they provide you with any finance assistance.
Evaluating your broker
Competition in the market means that you can choose which broker you want. Ideally, you would select a broker that has expertise in your type of lending. For example if you have a certain circumstance that will mean that you will not be accepted by all lenders then you will want to select a mortgage broker that knows about the lenders and loans that are suitable for people in your situation. Regardless of which if you have a special circumstance or not you will want to select a mortgage broker that has access to a wide range of lenders. They don’t need to have access to every lender in the country because many of the specialist lenders will not be appropriate for your needs. However, you do not want to miss out on a loan because it is not on your mortgage broker’s panel.
Selecting the wrong mortgage broker can cost you money, but getting the right one will make sure that you get the best loan for your needs. To assist you to make what may be financially one of the biggest decisions in your life, your mortgage broker should have sufficient experience in the broker industry and at a minimum be appropriately qualified.
The minimum requirements for all mortgage brokers is to be accredited under the National Consumer Credit Protection Act 2009, have a Certificate IV of Mortgage Broking, be a member of the Mortgage & Finance Association of Australia (MFAA) and/or the Finance Brokers Association of Australia (FBAA), and be a member of the Credit and Investments Ombudsman (CIO).
A good mortgage broker has good knowledge of loans of the type that you are looking for. However, don’t expect your broker to have all the answers relevant to your specific situation. If they seem to, especially if you have an unusual or complex situation then they may be bluffing. Expect your mortgage broker does some research to confirm the details of your particular loan.
Who is on your broker’s lending panel?
A broker is only as good as their lender panel. If the lender is not on their panel they can’t offer you their loans. This means that you could be missing out on the better loans that are available on the wider market. Not all lender will be relevant to you, some specialist lenders are suitable for people with bad credit or unusual employment or other aspects that may not be relevant to your loan application. So you need to know that the lender that they have are the ones that work for your requirements.
The mortgage broker industry is been self-regulated in most states and territories, all broker must be compliant with the regulations. All brokers must be registered with the Australian Securities and Exchange Commission (ASIC) and , be a credit representative of an organisation that holds an Australian Credit Licence or be a hold of an Australian Credit Licence (ACL) . The details of your broker’s registration must be provided to you prior to them providing you with assistance.
Most mortgage brokers provide a free service to arrange your home loan as they are paid a commission by the bank or lender. If your mortgage broker charges you a fee then this may be payable upfront or upon completion of their service.
Other considerations when selecting the best mortgage broker
Independence, integrity and reliability are vitally important when choosing a good mortgage broker. When you are dealing with the amounts of money that are required when buying real estate anything less is unacceptable.
Questions to ask a your potential mortgage broker
- How many banks and lenders are on your lender panel?
- Do you charge a fee for your service?
- Are you licensed or accredited with ASIC?
- Are you a member of the FBAA or MFAA?
- Do you specialise in any particular type of client?
- Do you have a mortgage? If so, who is it with and why? Is it fixed or variable?
- How long have you been in the industry?
- Who do you write most of your loans with, and why?
- Do you have a strategy for the current interest rate outlook?
- How does your mortgage broker service work?
- How can I know you are working in my best interest?
- What happens after my loan has been settled?
Finding the best mortgage broker near you
It is all well an good to say describe the best mortgage broker but next you need to find one that meets your needs. Depending where you are in Australia or overseas you may want to meet you mortgage broker face to face. Brisbane is gaining attention from property investors and home buyers due to the lower prices compared to Sydney and Melbourne and higher rental yields. If you are in Brisbane or thinking of purchasing a property in Brisbane you may want to use a Brisbane based broker for your property purchase.