Don’t Get Stung: Questions to Ask Your Mortgage Broker

Posted on June 5 · Comments

There are thousands of lenders and loan products in the market place today. Wading through all the options to find the best loan for you can be time consuming and laborious. Save time and money and get a mortgage broker to do the work for you.

A mortgage broker helps homebuyers select a loan, pre-qualify and complete the loan application. They follow the process from purchase to settlement to ensure a smooth transaction. A good mortgage broker will also help you with the First Home Buyers Grant, and correspond with your lender, real estate agent and solicitor so that the purchase process is as painless as possible.

There are mortgage brokers, and there are mortgage brokers. Before choosing one, there are some questions that you should ask to ensure you don’t get stuck with the wrong loan for you any unnecessary fees.

Is the broker a MFAA Accredited Mortgage Consultant?

To be an MFAA AMC member the broker must have achieved a minimum education and experience level, update their education regularly, abide by a strict code of practice and be a member of the Mortgage Industry Ombudsmen Service. To see if your mortgage broker is a member, go to the Mortgage and Finance Association of Australia (MFAA) website.

How many lenders do they have on their books?

Your mortgage broker should be able to offer you loans from as many institutions as possible over a spread of lender types (banks, credit unions, mortgage managers etc). The more choice that you have, the better the chance you will have at finding the best loan for you. Look for a broker with at least 15 lenders on it’s panel and check whether the broker is also a lender, they may be biased towards their own products.

Your mortgage broker should have a good knowledge of their panel of lenders and each lender’s products and policies. Find out which lenders they have so that you can compare the loan that the broker recommends with your bank or credit union.

How does the broker get paid commissions?

The broker should disclose all commissions that they get paid. Some lenders pay larger commissions than others. Make sure that the size of the commission doesn’t cloud the judgement of the broker. Some mortgage brokers get paid exactly the same commission regardless of the lender or product that you choose.

Does the broker charge you a fee?

There are many reputable free mortgage broker services, but some brokers charge you a fee. Ensure that you get a full breakdown of any and all fees before choosing your broker. Don’t get stung with hidden fees.

How does the broker compare loans?

Comparing loans isn’t easy. Make sure that the broker provides you with a clear explanation of the criteria and methodology they use to determine which loan is best for you. Find out the comparison rate of the loans offered. The comparison rate includes upfront and ongoing fees over the term of the loan to give you a better idea of the true cost of the loan.

What are their follow up services?

A good broker is one that will take you by the hand and lead you through the process of buying a house. Our mortgage broker took care of everything including a few settlement problems that we had. They also sent us a card, housewarming gift and called to see how we had settled into our new home!

Get recommendations

Word of mouth is one of the best ways to choose a mortgage broker. Talk to friends and family who have recently used a mortgage broker and get their recommendations.

For more information on choosing a mortgage broker, check out mortgagebroker.com.au.