When you're shopping around for a mortgage, your finance broker should be able to help you cut through all of the loan clutter so you can find the right loan for your personal situation.
However, sometimes that’s not the case: some unscrupulous mortgage brokers aren’t always looking out for your best interests, as they’re too focused on their own bottom line.
“The last thing we want to see is new homeowners entering mortgage contracts that don’t represent the most appropriate deal for them,” says Phil Naylor, CEO of the Mortgage & Finance Association of Australia (MFAA).
“Unfortunately, sometimes we see people get caught up in the excitement of owning their own home and the finer details of their mortgage contract are not well understood, and this can lead to serious problems down the track.”
That’s why it’s so important to deal with a qualified, experienced broker that you can trust. This is particularly important for first homebuyers who may be overwhelmed by the whole process of sourcing and applying for a new home loan.
“It’s important for buyers to understand that comparing home loans is not as simple as comparing rates alone,” Naylor says.
“The levels of service offered by a lender, flexibility of repayments and other features of the loan must also be considered. These are all the issues that a good broker can navigate with you to ensure that [you get] the most appropriate loan for your individual circumstances and needs.”
According to the MFAA, there are eight things you can expect from a reputable mortgage broker.
Your broker should:
- Listen to you and ask questions, to help them understand your overall financial situation.
- Present the myriad of home loans available that would suit you, as well as the product range of financial institutions. Keep in mind that the best deal is not necessarily the cheapest ratel; a good mortgage and finance broker will examine your circumstances and future plans to recommend a loan that is right for you.
- Make you aware of all of the fees and charges involved. Many loan products seem to offer a great deal, but they charge hefty penalties, fees and charges.
- Sign a mortgage/finance broker agreement – this document outlines the scope of work, services provided and fees associated. It should be correctly completed and signed by both parties.
- Disclose the commission structure and explain how much they will be paid by the lender for arranging your finance.
- Explain the compliance process, outlining who you can complain to and which organisation supervises the broker.
- Arrange to contact you periodically to review your mortgage and conduct a home loan “health check”.