How to find a mortgage broker
You don’t have to take the home loan journey on your own when a mortgage broker may be abl...
05 Apr, 2022
For many first-time buyers, the homebuying process is a daunting task. Aside from scouring listing sites for the perfect property, attending auctions, and researching the market, you need to ensure that your finances are in check to secure a home loan. Good thing that you do not actually have to do all these by yourself. A mortgage broker can take the burden of looking for the perfect home loan off your back.
In this digital era, many first-home buyers overlook the advantage of using mortgage brokers. While most homebuying questions nowadays can be answered in just a few keyboard taps and mouse clicks, relying so much on search engines could potentially mean losing a great home-loan deal.
Brokers play a vital role in your homeownership journey, and it is a must for you to choose your broker wisely, just as you would with your home loan.
When looking for brokers, you need to make sure that they have a license and are accredited under the National Consumer Protection Act.
They should also be a member of a reputable industry association such as the Mortgage and Finance Association of Australia, the Mortgage Industry Association of Australia, or the Credit Ombudsman Service.
How do you start looking for a broker? One way is to go directly to brokerage firms that have a roster of experienced brokers. Some consumer-oriented websites, like Your Mortgage, can also help you reach out to the right brokers.
Word-of-mouth referrals from friends and family can also assist you in finding the best broker to work with. These recommendations can help you get a better sense of your brokers' work ethic and experience: Are they punctual and organised? Do they show in-depth market knowledge?
Here are some of the qualities you should look for when finding a mortgage broker:
Applying for a home loan is a painstaking process that needs an attentive eye. Mortgage brokers should always be on top of things and should never leave out crucial information. One overlooked mistake could cost you your dream home.
An ideal broker keeps you updated and discloses every factor that can affect your mortgage application. Transparent brokers also make an effort to help you understand the perks and disadvantages of certain home loan offerings.
Brokers should also be upfront and direct about the fees and charges related not just to the loans but also to their services. They should always put your needs first — they should not give you an offer that could eventually leave you with empty pockets. It is actually a mandatory standard for financial professionals to always act in the best interests of their clients.
Communication is key to any successful relationship. It is critical for mortgage brokers to have excellent communication skills — you want a broker who can explain complicated loan terms and make sense of confusing processes.
Part of being an excellent communicator is the ability to listen. If you encounter a broker who keeps on bombarding you with options without even considering your financial health, then you should run away fast. Brokers who seem to ignore your qualms and uncertainties are likely to be only after the commission they are going to make when you close the deal.
The process of buying a home is already stressful — you do not want to waste any of your time waiting for your broker who regularly shows up late to meetings or never returns your calls. A good broker should always respect your time and should not keep you hanging, especially in the most pressing times.
For them to be efficient, brokers need to be organized. Since they deal with a lot of clients on a daily basis, they should always keep structured schedules and to-do lists. You would not want to work with brokers who do not have a system in place to organize their commitments.
Mortgage brokers are not here to promise you the world. Instead, they should always be in touch with reality. Practical brokers assess your current financial conditions and help you determine the most plausible options. A good broker is analytical — they should be able to point out things about your financial health that may not be obvious to you and offer you sound advice on how to overcome financial obstacles.
You want mortgage brokers who are the best at what they do. They need to have a deep understanding of the market and how to navigate it. They know not just what they are offering but also the other options in the market. Brokers who are always unsure about the questions you ask might not be the ideal partner in this journey.
A mortgage can be a life-long commitment, and you want a broker who doesn’t see you as just a one-off deal. When you close your transaction and get that stamp of approval, you need a broker who pledges to keep in touch should your needs and goals change.
When you get a mortgage broker, you are, in essence, hiring them for their services. And as with any job application, you should ask them certain questions that will help you get to know them more.
One of the first things you need to ask your brokers about is their network of lenders. This will show you how diverse and wide your options are going to be. It also shows which lenders trust them to present their offerings to potential clients.
It would be best if you also ask them about how they are getting paid. Generally, most brokers offer their services for free while others, especially those under an agency, might charge you with a fee.
Brokers get commissions from lenders. There are two types of commission: upfront and trailing. An upfront commission is a payment made by the lender to a broker once a borrower seals the deal.
Brokers can still get paid after finalizing a loan deal through trailing commissions. Lenders will continue to pay the broker recurring commission as long as you stay with your current deal, and you do not fall into arrears.
This is where a potential conflict of interest can arise. Brokers might promote particular mortgage products or lenders without considering your needs because of a generous commission that awaits them after the deal. While it is always imperative for brokers to prioritise your needs, there could be a few bad apples who only care about the money they would make out of the deal.
Here are some of the other questions you can ask your brokers to get to know them more:
The power of mortgage brokers lies in their network of lenders and home loan products. In a very competitive space, it is a massive disadvantage for buyers to miss out on the better deals available in the market.
Before helping you submit your home loan application, mortgage brokers determine the best deal by performing several checks on your finances. On the other hand, you can also get an idea of how much the mortgage expense would be using a financial calculator.
One of the essential things brokers check is your credit score, which serves as a report card that allows lenders to get a glimpse of how you are as a borrower. If your broker thinks your credit score is not at an ideal level, he or she might advise you to settle other financial obligations on time.
Brokers use an excellent credit score to get the upper hand when negotiating with banks for better offers. To help you gauge your current borrowing power you can use this tool: Borrowing Power Calculator
Brokers also need to know your sources of income. If you are employed, you need to be at least six months in your current position to have a higher chance of getting approved for a loan. Brokers can easily find the best deals if you have a stable source of income.
If you are a self-employed, part-time, or casual worker, the process gets a little complicated. Lenders often see these types of employment as riskier, and they could offer you an expensive deal. However, a mortgage broker can help you find the right lender and the ideal home-loan product for your situation.
Mortgage brokers are the perfect people to seek help from when buying a home. They are not merely agents who sell you with home loans — instead, they are life partners who are committed to help you achieve the Great Australian Dream.
Experienced brokers make the process of loan application fast, and increase your overall chances to get approval from your chosen lender. They can understand your unique circumstances and work with whatever you have to find a mortgage that suits your needs.
Good mortgage brokers will be there to guide you all throughout the process of buying a home, from loan application all the way to settlement day.