LIKE SAVING MONEY?
YOU'LL LOVE MORTGAGE BROKERS
Using a mortgage broker is one of those amazing life hacks that you’ll try and never look back. I mean, why wouldn’t you – they do all the leg work and save you money. Whether you’re looking at refinancing, buying your first home or your next home, it’s a good time to learn about the benefits of mortgage brokers. With so many loan options out there – a little inside knowledge can go a long way.
What do they do?
Essentially, they deal with banks and other financial institutions to arrange a home loan for you. They’ll look at the spread of offers on the market and find the best deal for you.
A good broker will:
- Work out exactly how much you can afford to borrow – and won’t stretch you beyond your means
- Understand your needs and goals
- Explain how each loan works and also how much it will cost – they’ll inform you of interest rates, fees and other features/benefits – offset accounts etc
- Take care of the loan application and manage the process all the way through to settlement
So, how do they get paid?
No, they’re not just helping you out of the goodness of their heart – though many do have good hearts! They’re paid by the lenders – they receive a fee or commission for selling their product. Great for you – because you don’t have to pay a cent for their service!
It’s important to note though, some brokers get paid a standard fee no matter what they recommend, while other brokers get a higher fee for recommending certain loans. Obviously, this may influence the loan options they serve up for you, so be aware.
There are some cases where a broker may charge you a fee directly. If you’re not sure if you’re getting a good deal or not, ask around or look at reviews online.
What to do before you meet your broker
1. Check your broker is licensed
To check if your broker is licensed to give you credit (loan) advice you can search the following 3 lists on ASIC Connect’s Professional Registers:
- Credit Registered Person
- Credit Representative
- Credit Licensee
To search, choose the list name in the ‘Select Register’ drop-down menu. If the broker isn’t on one of these lists, they are operating illegally.
2. Consider your must-haves
Before you see a broker, think about what matters most to you in a home loan. Do you simply want the lowest cost loan? Do you want specific features, such as being able to make extra repayments? Thinking about this beforehand will make the conversation with your broker easier. Also have a think about your nice-to-have list.
Meeting with your broker
Bring your list of must-haves + nice-to-haves.
And ask them lots of questions. Make sure you get them to explain exactly how each loan option works and all the costs associated with the loan.
Remember, you don’t have to take the first loan you are offered. A home loan is a long term loan – small differences in interest rates really add up over time.
Questions to ask your mortgage broker:
- Do you offer loans from a range of different lenders?
- How do you get paid for the advice you’re giving me? Does this differ between lenders?
- Why did you recommend this loan to me?
- What fees will I have to pay when taking out this loan?
- What features (options) come with this loan? Can you show me how they work?
- Can you show me a couple more options, including one with the lowest cost?
- What is the threshold for lender’s mortgage insurance (LMI) and how can I avoid it?
- What information do I need to provide for the loan application?
Get a written quote from the broker:
A written quote tells you the:
- type of loan
- loan amount
- loan term (duration)
- current interest rate
- fees you have to pay (for example, broker’s fee, loan application fee, ongoing fees)
In person or online
The other great thing about mortgage brokers is you can do all the initial investigation over email or with video calls. You don’t need to meet until you’re signing contracts – great for the busy person, which let’s face it, is all of us!
Why wouldn’t you?
If you’ve been umming and arring about using a mortgage broker, just try it! I have a great list of contact I’d happily share with you. Every little bit of money saving counts!