How Mortgage Brokers Work
With hundreds of lenders offering a vast range of loans, using a mortgage broker is essential for finding the home loan that is in their best interest. There are plenty of great deals around if you know where to look and who to ask. Every day, good mortgage brokers link home owners, investors and business people with the best finance products available from their panel of major banks and lenders.
A good broker is someone who should have the best interest of all your funding needs at heart. Showing you what home finance is available, helping you choose the right home loan, getting it approved, settled and staying in touch afterwards, and then monitoring both your changing circumstances along with interest rates and economic influences.
Your mortgage broker will:
- Discuss your existing situation, your home loan needs and requirements, and obtain all necessary information pertaining to your home loan application.
- Explain the types of home loans available to you from a range of banks and specialist finance companies.
- Based on the information provided by you and utilising specialist home loan software, match your home loan requirements to a selection of home loan products offered by our panel of lenders.
- Provide an overview of your ‘Purchase Budget’ incorporating the relevant costs associated with your home loan application in writing.
- Provide an in-depth overview of the home loan product or products you select in writing.
- Complete and package your home loan application and deliver it to the lender’s assessment team on your behalf.
- Act as an intermediary between you and the lender, negotiating the terms and conditions of your loan. They will also answer any questions the lender’s assessment team may have.
- Liaise with your solicitor, real estate agent and accountant and any other related parties to ensure a smooth and timely settlement.
- Assist with any future home loan requirements, whether you wish to check, change or top-up your loan.
- Act as a valuable information service beyond the settlement of your loan by providing you with relevant information on the home loan market, updates on products and special offers that may be of interest to you.
Why is a consultation with a mortgage broker free?
When you decide which lender you want to work with, that lender pays the broker fees or commissions for directing your business to them. Your interest rate will be just the same as if you were dealing directly with a bank manager or lender yourself. To be sure you are being recommended to the right lender, just ask your broker to show you all the lenders on their panel, and what your loan options would be, against each lender’s criteria. A good mortgage broker will provide you with a range of suitable options without the need to ask. You can also ask to see the commission your mortgage broker will make from each lender.
Finding a good mortgage broker
- Does the broker belong to a reputable industry association? Is the broker independent or do they only deal with a certain lender?
- Do they offer a wide range of loans from a variety of independent lenders?
- Has the broker disclosed all fees and commissions prior to signing up (as a guide, the fee should not be any larger than 1.5 – 2 per cent of the loan amount)?
- Can the broker justify their recommendations? Be aware that brokers receiving commissions or kickbacks from lenders may recommend the loan that gives them the biggest commission.
- What qualifications/courses has the broker undertaken – some lending institutions will only allow accredited mortgage brokers to sell their product and accreditation is achieved by completing a training course on their products?
- Do you know exactly what you are agreeing to when you sign up? Some brokers require you to pay them if they successfully obtain an offer of finance – even if the interest rate and conditions on the loan found by the broker do not suit your needs.
- Does the broker expect an upfront fee? Reputable brokers do not.
- Is the broker a lender as well as a broker? This may affect their recommendations.
- Does the institution have a dispute resolution system in place? Do they have professional indemnity insurance? Can you have a copy of the application and any financial details they send to the lender on your behalf?
- What happens with your personal information – is it kept in a secure place or is it accessible to anyone during the process and what happens to it after the loan is granted?
- Will you be comfortable if brokers come to your home? Some brokers are trained to exploit your politeness to improve their chances of a sale.