Congratulations - you've found the perfect house and you're ready to make an offer. The next step is securing a home loan, and the best way to do that is through a mortgage broker. Mortgage brokers act as the middleman between you and the bank; they help you find the best home loan for your unique situation, and they also have access to lenders that you may not be able to work with on your own.
But before assuming you’ve sifted through all the quality home loans in Melbourne and found the absolute perfect one for your circumstances, it's important that you ask some questions.
Here are eight questions you should ask your mortgage broker before signing on the dotted line.
What type of accreditation do you have?
You want to make sure that your mortgage broker is accredited with either the Mortgage & Finance Association of Australia (MFAA) or the Credit & Investments Ombudsman (CIO). This will ensure that they adhere to a strict code of conduct and will act in your best interests.
What lenders do you work with?
Your broker should have relationships with multiple lenders in order to get you the best possible interest rate. They should also be able to explain the difference between the lenders in order to help you make an informed decision about which one is right for you.
Will you be paid a commission?
Mortgage brokers get paid by the lender; not by you, the borrower. However, some lenders pay higher commissions than others, so it's important to ask your broker how they're being compensated. This will help ensure that they're not steering you towards a particular lender simply because they'll make more money off of it.
How much experience do you have?
You want to make sure that your mortgage broker knows what they're doing and has plenty of experience in the industry. Ask them how long they've been brokering mortgages and how many deals they've successfully completed.
What are your qualifications?
In addition to experience, your mortgage broker should also have the proper qualifications. Most brokers will have at least completed a Certificate IV in Finance and Mortgage Broking, but some may also have completed a Diploma or even a Bachelor's degree.
Are there any upfront fees?
Some mortgage brokers may charge upfront fees for their services while others will only charge a commission once the deal has gone through. Be sure to ask about this so that there are no surprises down the road.
Do I need insurance?
Most lenders will require borrowers to take out personal loan insurance, especially if you're borrowing more than 80% of the property value. This protects them in case you can't make your repayments and they need to sell the property to recoup their losses, but it does increase the cost of your loan so it's important to factor this into your decision-making process.
How often can I refinance?
Many people choose to refinance their home loans down the road in order to secure a lower interest rate, but not all lenders allow this or put restrictions on how often it can be done. Be sure to ask about this before signing up for a home loan so that you know what your options are down the road.
Ready to get started?
When taking out a home loan, working with a mortgage broker is often the best way to secure financing. But before committing to a broker, it's important that you ask these key questions first. By doing so, you can be sure that you're getting the best possible service. Good luck!
