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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