When you’re ready to take on a home loan, you can simply rock up to your nearest bank or credit union and put in an application, right? Well this might do it, but it may not be the best approach. Getting a home loan isn’t easy, and getting one suited to your personal situation is even less easy. Enter your new best friend: an experienced mortgage broker.
The benefits of a mortgage broker are no secret and over 50% of Australian homebuyers see a mortgage broker for their home loan. Let’s explore in more detail…
What does a mortgage broker do?
A mortgage broker deals with multiple lenders offering a smorgasbord of home loan products and acts as a go-between for lenders and borrowers. Most brokers will have access to approximately 90% of the 1800+ home loans on the market1. They are experts on the different types of loans available, how different lenders work and what their requirements are before they will agree to a loan.
They can sift through all these mortgage products for you, recommend those they feel best suits your needs and help you through the gauntlet of the lender’s requirements so you secure the loan.
How much does a mortgage broker cost?
Usually nothing! Most brokers are paid commission by the lenders they deal with. However, some brokers charge fees instead of or on top of their commission so check first to find out their fee structure – it will really depend upon the services they provide. As with any advisor, shop around until you find the person you feel most comfortable with – that is, one you feel has the greatest knowledge and your best interests at heart. Look for someone with experience who understands the industry and who listens to what you are after.
What should I check before going with a mortgage broker?
Always check that the broker is licensed. You can do this via the Australian Securities and Investments Commission’s Professional Registers online, by calling ASIC’s Infoline on 1300 300 630 or looking up the Mortgage and Finance Association of Australia’s website.
He or she should be licensed under the National Consumer Credit Protection Act, have suitable qualifications and must give you a Credit Guide (which includes their licence number, fees and details of your right to complain) on first meeting with you.
Ask for testimonials from previous clients. If a broker has loyal clients who have used their services several times over a number of years of buying and selling properties then you have probably found a winner.
How do I work with a broker?
You need to explain clearly to the broker what your financial situation is currently and what your plans are. The broker will assess your situation and work out the maximum home loan a lender is likely to allow you and calculate other upfront costs you will need apart from a deposit, such as stamp duty and legal fees.
Your broker will then work out which lender(s) and home loan product(s) are most suitable for you and guide you through the application process. It’s important to be upfront with him or her about any financial problems in your past that might lead to your application being rejected.
The lender’s credit assessor will check your credit file for the past five years. If they see that you were late with any other loan or credit card payments for a period of time, they may interpret this as being due to you being irresponsible with money, so make sure you honestly explain to your broker the circumstance which led to any late payment issues so that he or she can fill in your ‘story’ for the credit assessor in a more positive light.
Once your loan has been preapproved by a lender, you can jump up and down with joy and hug your broker. Your broker will continue to guide you through the process until settlement of your purchase and can offer guidance on other products you may need such as loan protection insurance.
So, that’s why a mortgage broker can become your new best friend
A knowledgeable, industry-savvy and genuinely helpful mortgage broker can save you a great deal of time and money, not just with your first home purchase but for subsequent home loans and investment loans in years to come.
So take time finding a broker you can trust implicitly, who explains everything clearly in simple language and will go the distance to set you up securely for the future.
To speak with an ALI authorised mortgage broker, please contact the friendly team here.
Loan Protection Plan is jointly issued by Hannover Life Re of Australasia Ltd ABN 37 062 395 484 (Death, Terminal Illness, Living and Accidental Injury Benefits) and QBE Insurance (Australia) Limited ABN 78 003 191 035 AFSL 239545 (Involuntary Unemployment Benefit). It is distributed by Australian Life Insurance Distribution Pty Ltd ABN 31 103 157 811 AFSG 226403 (ALI). ALI receives commission for each policy sold. Any advice provided is of a general nature only and does not take into consideration your personal objectives, financial situation or needs. You should consider the Product Disclosure Statement when deciding if this product is appropriate for you.