Using mortgage brokers can make it much easier for you to find the right first home loan, but it’s important to make sure your broker has the experience and credentials to give you the help you need. Before you settle on a home loan broker, you should ask these key questions:
Is the broker a member of an industry body?
Bodies like the MFAA (Mortgage & Finance Association Australia) regulate their membership and perform checks to make sure mortgage brokers have the correct certifications. If your broker is a member of a body like this, you can assume they are fairly knowledgeable about the industry.
How much commission does the broker receive on each loan?
Brokers work on different commission structures with each lender, so they may sometimes be more keen to get you signed up to one type of loan than another. Make sure you check how much commission they are receiving for each loan, particularly if they are pushing one product harder than the others.
How much experience does the broker have?
It's a good idea to ascertain how long your home loan broker has been in the business, and track down previous clients who have used them. More experienced brokers will have stronger relationships with lenders, which could affect the end price you will pay for your first home loan.
Is the broker offering you a better deal?
A good mortgage broker should be able to get you a better deal for your home loan than the banks, but this is not always the case. Make sure you shop around on your own to verify that the loans on offer are better than what you could get yourself.
Is the broker encouraging you to borrow more than you planned?
Again, this is a commission issue, as brokers sometimes earn commission based on the value of the loan they are bringing in. If your mortgage broker is encouraging you to borrow big, you may need to consider going elsewhere.
How many lenders does the broker deal with?
A good mortgage broker may have their preferred partners, but they will always offer you a range of mortgage lenders to choose from. If your broker is not doing this, you could be missing out on a better deal from another lender.
Does the broker guarantee their loan estimates?
A good test of a mortgage broker is whether they will guarantee the deal they first offer you. Some brokers are only able to offer a ‘good faith estimate’ of the rates and fees you will pay, which may change during the home loan application process. If this is the case, they should make sure you’re fully aware that the numbers they quote you might not be final.
Does the broker charge any fees?
Most brokers earn their money on commission only, but some also charge up-front fees. Your home loan broker should be able to give you a written record of any and all costs you’ll have to pay when you start working with them.
Can the broker give you a full picture of the loan they are offering?
Home Loan packages often start off with low fees for the first few years, but contain hidden costs. A good broker can give you all the information you need to make a good long-term decision, and should not be vague on the specific details of the loan.
Does the broker come with good references?
The best mortgage brokers will get most of their clients through word of mouth, so there should be no shortage of people who will recommend them. If you heard about your broker through friends or family, talk to them about their experience – this will probably tell you all you need to know about the service you can expect.
Choice Home Loans have a range of experienced, friendly and industry-certified mortgage brokers waiting to work with you to find your perfect first home loan. Talk to a Choice broker today to find out how you can take the hassle out of the mortgage process.
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