Mortgage Broker Checklist
A mortgage broker is an intermediary between borrowers and lenders.Mortgage
brokers can help borrowers choose an appropriate loan and
assist them in the application process. Mortgage brokers usually don't
charge borrowers for their services as they are paid by the lenders with
whom they arrange the loan.
If you're planning to use a mortgage broker to help you find the perfect
home loan, there is some information you should find out from your broker
before you start.
1. Which
lenders (and which loans) does the broker have on their 'books'? Some
brokers may recommend loans selected from more than 20 different institutions,
while others may only consider loans from a couple of lenders. Make sure
the broker deals with a spread of lender types (banks, mortgage managers
and others). The larger and more varied the array of lenders and the number
of loans, the more likely you are to find the most suitable loan for you.
Lenders represented.
2. How
does the broker get paid? Make sure that the broker does not let the size
of the commission they will be paid by a lender cloud their judgment.
While some lenders pay higher commissions, brokers should not favour higher
commission-paying lenders over others.
Your Notes.
3. What
fees does the broker charge? Ask the broker to clearly specify what fees
and charges you will incur by using their service. Some brokers charge
no fees ? they receive a commission from lenders when borrowers take up
a loan that was recommended to them. Others will charge you a one-off
fee.
Fees.
4. Ask
the broker how they compare loans and how they determine which loan is
best for you. Comparing loans is not an easy task. Make sure the broker
can provide you with a clear explanation of the methodology and criteria
they use. If they are unable to do this be wary, as they may be basing
their decision on the size of the commission they will receive.
Method of analysis.
5. Find
out the comparison rate of the loans recommended to you. This rate takes
into account the loan interest rate as well as upfront and ongoing fees
and charges to give a better indication of the actual cost of a loan.
All brokers should be able to provide you with these rates. If they can't,
be sceptical.
Comparison rate supplied.
6. See
if the broker is a lender themselves ? you don't want a mortgage broker
recommending loans to you if they offer their own loans (unless you can
be guaranteed that they always recommend the best loans and do not lean
towards their own).
Are they a lender?
7. You
are within your rights to ask for proof of professional qualifications,
information on the broker's experience or references from other clients.
Your notes.
8. Does
the broker have professional indemnity insurance? Make sure they do. It
covers them in the event that they are sued for negligence or breach of
professional duty. This means if you have to take legal action against
them for some reason, they will be insured against this.
Insured with.
9. Ask
what privacy guidelines they follow when handling your information.
Do they comply?
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