When it comes to finding the best home loan, it’s a jungle out there.
Mortgage brokers can be your guide, offering an array of products and services to help you own your first home, refinance an existing loan or climb the property ladder.
More than half of the loans in Australia are arranged by brokers who can provide advice on the best loan for your circumstances.
They must assess your financial capacity, understand your long-term aspirations for wealth and give you appropriate lending options.
It is important to understand that banks and other lenders pay commissions for the loans brokers arrange although they are obliged to explain this to you. On the plus side, you don’t pay for their service.
Brokers operate under the National Consumer Credit Protection Act and should be members of the Mortgage & Finance Association of Australia (MFAA).
You should consider talking to a selection of brokers. The best ones will be experienced and be accredited to sell on behalf of a large network of lenders. Some good brokers will sell only a few products, believing these to be the best in the market.
So, you’ll need to make your own decision on which way to jump.
Key Benefits of using a Broker
- Brokers offer a wider range of loan products than a bank or any other mortgage lender.
- You don’t pay a fee for their service, but be aware they earn commissions from lenders on what they sell to you.
- They should be members of the MFAA and operate under a code of practice, which requires them to declare their commission fees in advance of a transaction. Make sure they do.
- Brokers will assess your financial situation and provide a copy to you on request, should you wish to use it independently.
- Comprehensive knowledge of competing products, including actual costs, repayment schedules and fees, allows them to make the recommendations to suit your personal situation.
- They’ll advise you on all the costs associated with taking a loan, refinancing and buying a new home – a huge plus for anyone who has never bought a property before.
- They will orchestrate the application process, taking the burden off you.
- Brokers will act as a “go-between” for you and the lender if there are issues associated with your application.
- If you have a bad credit history, a broker will know which lenders will be prepared to take on your risk.