Advantage of Using A Mortgage Broker

In a recent estimate, the Mortgage and Finance Association of Australia said that mortgage brokers are now responsible for arranging 4 in 10 mortgages. A mortgage broker is an intermediary, similar to a travel agent or a real estate agent. They sit between the borrowers on one side and the mortgage lenders on the other. Their job is to help you find the most appropriate loan that fits your circumstances and then assist you in applying for that loan.

It is not the mortgage broker that provides the end product. The loan comes from the mortgage lenders, while the mortgage broker merely acts to introduce borrowers to the mortgage lenders. The mortgage broker does receive a commission for such deals, but commissions are paid by the mortgage lenders, not you.

So why would you use the services of a mortgage broker? Because they know a lot more about the huge variety of products on the market than you ever will and can therefore save you a lot of time researching the market. They know how to compare all the different deals and can work out which is the one most suitable for your particular circumstances. They can also help you with the confusing loan application process. And, because they know how the different mortgage lenders assess applications, they can save you a lot of time and emotional stress.

There are over 20,000 mortgage brokers doing business in Australia today, so you have a wide range to choose from for assistance in shopping for a home loan, especially in getting favourable home loan rates. When you obtain a home loan through a mortgage broker, you should look out for some things, such as:

Make sure the mortgage broker has good qualifications and experience. If possible, ask previous borrowers for their feedback. Check if the mortgage broker has completed training courses on the profession and is a member of the Mortgage Industry Association of Australia. Membership in MIAA is not compulsory, but it is desirable because the association imposes a binding code of practice on members.

The mortgage broker must be able to provide a wide selection of home loans from various types of mortgage lenders. The more choices available, the better the likelihood of finding the most suitable loan for you at the most favourable home loan rate.

Ascertain from the mortgage broker their process of researching and rating the mortgages they offer. You want a mortgage broker who can give a clear explanation of the rating criteria.

Request from the mortgage broker a formal comparison of all loans they recommend. This should also cover the upfront and ongoing fees, and the average annual percentage rates. Ensure that the home loan rate used is applicable to your proposed loan amount.

Make certain the mortgage broker discloses commissions and payments they receive from the transaction. This will help you judge the value of the recommendation. You don’t want a loan recommendation that is influenced by the amount of commissions the mortgage broker is expecting.

Find out if the mortgage broker will charge you a fee. Although it is common practice not to charge borrowers, there are mortgage brokers that do, so it is best to enquire about possible fees.

Regardless of what the mortgage broker recommends, try to double-check things to satisfy yourself that you are getting accurate and unbiased information.

Ascertain whether the mortgage broker will preserve the security and confidentiality of your personal and financial details, in compliance with the Privacy Act.

Mortgage brokers are a big help, and save you the hassle of traipsing from one mortgage lender to another. But be prepared to do your homework to maximise the benefits of using a mortgage broker.

Disclaimer:

No investment advice provided to you.
This web site is not designed for the purpose of providing personal financial or investment advice. Information provided does not take into account your particular investment objectives, financial situation or investment needs.

You should assess whether the information on this web site is appropriate to your particular investment objectives, financial situation and investment needs. You should do this before making an investment decision on the basis of the information on this web site. You can either make this assessment yourself or seek the assistance of any adviser.