Competition between home lenders for your business continues to be fierce even in these economic times, and your choice of provider extends far beyond the big four banks.
The challenge is to understand all the products available and which ones would best suit your circumstances.
Homebuyers are increasingly looking to mortgage brokers to help them navigate this complex environment. They do not charge you for their services but receive commissions from lenders for the loans they write.
Mortgage brokers operate under a strict industry code designed to ensure their advice is impartial and serves your best interests. Further, the good ones will want your business for more than just one loan. They know you’ll likely to be back to refinance, switch lenders or seek a new loan when you take a step up the property ladder.
But even if your mortgage broker is highly recommended by family or friends, do your own due diligence. Here’s 20 important questions you should ask.
Credentials:
1. Are you a member of the Mortgage Finance Association of Australia (MFAA) or Finance Brokers Association of Australia (FBAA)?
2. Do you have your own credit licence, or are you a credit representative?
3. How long have you been a mortgage broker, and approximately how many loans have you written?
4. Can you provide references from some of your clients?
5. Why shouldn’t I go to a bank?
Process:
6. How many lenders do you represent?
7. How long have you been offering this range, and how well do you know each of their product portfolios?
8. How do you select the loan that best suits me?
9. What’s Lenders Mortgage Insurance, and why do I need to bother with it?
My finances:
10. What’s the deposit required to obtain a loan?
11. What fees associated with taking out a home loan?
12. What information do I need to provide you to obtain my finance?
13. How do my credit cards affect my borrowing capacity? What’s the impact of missed credit card payments? Can you help me deal with that?
Product choices:
14. What features are included in the loan(s) you are recommending?
15. Can I fix the interest rate now, or at a time of my choosing?
16. What are the steps for obtaining this loan?
17. How long will it take to get the loan approved?
18. What do I need from you so that I can confidently bid at auction, or make an offer on a property?
Fees:
19. If I’m not paying you, then how do you earn your money?
20. What commission will you get explicitly paid for writing my loan?