Buying a home is likely one of the biggest financial decisions you’ll make in your life. While the process can be exciting, it can also be daunting, especially when it comes to financing your dream home.
What is the role of a mortgage broker?
A mortgage broker is a professional who will liaise with banks and other lenders or financial institutions to organise your home loan. They will have access to a range of loans and financial products and will save you the time of going to a handful of lenders yourself. After the broker has contacted banks and other lenders, they’ll come back to you with a selection of loans and explain how each product works. The key things they’ll cover include interest rates, features of the loan (e.g. offset accounts or no fee for early payout of the loan or extra repayments), and other fees.
How can a mortgage broker help?
A mortgage broker can help you by taking all of the time-consuming leg work that goes into securing a home loan. As experts in home loan products, they also have a thorough understanding of the different fees associated with a mortgage and they can find a loan even if your current lender is no longer suitable for your needs.
When should you see a mortgage broker?
If you’re looking to buy a property or refinance your current mortgage, prepare all of your questions and important documents and organise an appointment with a mortgage broker. You’ll need to take several documents to your appointment including recent payslips or proof of income, bank statements, a current form of photo ID, recent tax returns and recent statements for your other credit facilities.
Some questions you may want to ask at your appointment include:
- Which lenders do you work with?
- How does your payment work for giving me a loan? Does your payment change based on the lender?
- What fees are associated with this loan?
- Why are you recommending this loan?
- What other options are available? Can you show me the lowest cost loan on the market as a comparison?
- How can I avoid lender’s mortgage insurance (LMI)?
- Can I have a written quote for the loan including type of loan, loan amount, loan duration, interest rate and fees?
What is the cost of using a mortgage broker?
The lender typically pays mortgage brokers a fee, so you don’t pay anything, so you don’t pay anything. The current revenue model is generally an upfront payment upon settlement of the property (usually around 0.6% of the loan amount). Your broker may also potentially receive smaller annual payments (0.1 to 0.15% of the loan amount) for as long as you’re a customer of the lender. Some mortgage brokers, however, will charge a fee upfront for their services. Make sure you get written confirmation of what fees your broker may charge and how they’re paid for finding you a loan.
Get the right advice before you move ahead
Whether you’re a first-home buyer, looking to refinance, or building an investment portfolio, a mortgage broker can help you get access to the best home loan for your goals. Make sure you speak to a qualified financial professional before you make any big decisions to ensure the transaction is structured effectively for you.