| mortgage broker, mortgage | 26 Mar 2008 11:00 PM |
| Why use a mortgage broker by Michelle Kour | |
In Australia most people go to mortgage brokers to get access to a greater range of mortgage options, for better service and for the mortgage broker's ability to negotiate with lenders. A mortgage broker offers loans from a panel of financial institutions, including banks and non-banks. In Australia there are literally hundreds of lenders offering many mortgage options as they compete for customers with their new home loan products every day. Using a mortgage broker is now an essential part of sourcing the market for the right home loan. In plain terms, mortgage brokers evaluate your situation against the 20 or 30 lenders on their panel and then make recommendations or suggestions as to which lender and product best suits your needs.
Specialised mortgage lenders offer competitive products to first home buyers, self employed and business people, retirees, new Australians and immigrants, previous bankrupts and people with a bad or poor credit history. One of the great advantages of using a good mortgage broker is that they have access to many of these lenders and their products, so no matter what your circumstance they are generally able to find a suitable mortgage or home loan for you.
Mortgage brokers usually run their own businesses. Lenders work with mortgage brokers because they effectively give the lender a bigger "shop front" without carrying a traditional employee or "bricks and mortar" branch overhead. Some lenders have few or no branches (but rather operate from one head office and then and partly rely on mortgage brokers to represent their products in other localities around Australia. Other lenders like the big four banks have their own branch networks, but also extend their access to customers through the mortgage broker network. The lender pays the broker fees or commissions for your business. Just as if you were dealing with a bank manager or lender, these fees do not change the interest rate you pay on a home loan. To be sure you are being recommended to the right lender, ask your mortgage broker to show you a range of lenders on their panel, and what loan options you would be able to qualify for.
What a Broker should do for you When you first meet with a broker, they should always start by asking you to explain your entire finance situation, including future plans. Little things can make a big difference to making sure you get the right home loan for your situation now and with flexibility for future changes. Have your key documents on hand to refer to when meeting with the broker so you can give the most accurate details to ensure you get the right home loan.
Your Mortgage Broker should:
• Discuss and confirm loan scenarios and options in writing
• Explain all documents in the loan application process and assist in completing the loan application
• Explain the loan process, from start of the application to closing
• Explain associated costs, fees and disbursements of the loan application
• Communicate with you throughout the loan process
• Follow up the lender for you from application through conditional and on to unconditional approval
• Negotiate with their lender or lenders to achieve the best deal
How do I know a mortgage broker is any good?
Establish the right mortgage broker for you and check his/hers experience and qualifications. A good mortgage broker will be committed to the industry’s code of practice. It is vital to ensure you're getting the best loan for your needs. Below is a checklist that will help you know if your mortgage broker is a good person
• For residential loans, all of the mortgage broker's services should be free – remember mortgage broker’s are paid commissions from the lenders
• The right mortgage broker will take the time to really understand your entire finance situation, both now and into the future
• Your mortgage broker should have a range of home loans from a wide variety of lenders, for example, banks and non-banks, conforming and non-conforming lenders
• Check that your mortgage broker is not just an agent for one lender
• Check the qualifications and experience of your mortgage broker, even ask for references from previous borrowers
• Is the mortgage broker a member of MFAA - Mortgage & Finance Association of Australia – and thus bound by its Code of Practice?
• Is your mortgage broker a member of an external dispute resolution entity such as Credit Ombudsman Services Limited – this ensures you have an avenue for free and fair mediation if you do get into a dispute.
• Ensure your mortgage broker discloses all commission and payments received by the lenders • Ask your mortgage broker to show you how the loans they offer compare to your own situation (on a computer).
• Ask your mortgage broker how they comply with the Privacy Act to ensure security of your personal and financial details
• Your mortgage broker should have appropriate insurances (for example Professional Indemnity Insurance Cover)
• A good mortgage broker should be able to explain the most complex loans in simple plain English
In conclusion when deciding upon a mortgage broker make sure you feel comfortable with them, that they are experienced and able to offer a range of loan products – not just those available through the banks. Quite often a mortgage broker will push one particular lender’s products because they know them well - there may in fact be better product out there so make sure the mortgage broker you use is unbiased in his recommendations to you.
Specialised mortgage lenders offer competitive products to first home buyers, self employed and business people, retirees, new Australians and immigrants, previous bankrupts and people with a bad or poor credit history. One of the great advantages of using a good mortgage broker is that they have access to many of these lenders and their products, so no matter what your circumstance they are generally able to find a suitable mortgage or home loan for you.
Mortgage brokers usually run their own businesses. Lenders work with mortgage brokers because they effectively give the lender a bigger "shop front" without carrying a traditional employee or "bricks and mortar" branch overhead. Some lenders have few or no branches (but rather operate from one head office and then and partly rely on mortgage brokers to represent their products in other localities around Australia. Other lenders like the big four banks have their own branch networks, but also extend their access to customers through the mortgage broker network. The lender pays the broker fees or commissions for your business. Just as if you were dealing with a bank manager or lender, these fees do not change the interest rate you pay on a home loan. To be sure you are being recommended to the right lender, ask your mortgage broker to show you a range of lenders on their panel, and what loan options you would be able to qualify for.
What a Broker should do for you When you first meet with a broker, they should always start by asking you to explain your entire finance situation, including future plans. Little things can make a big difference to making sure you get the right home loan for your situation now and with flexibility for future changes. Have your key documents on hand to refer to when meeting with the broker so you can give the most accurate details to ensure you get the right home loan.
Your Mortgage Broker should:
• Discuss and confirm loan scenarios and options in writing
• Explain all documents in the loan application process and assist in completing the loan application
• Explain the loan process, from start of the application to closing
• Explain associated costs, fees and disbursements of the loan application
• Communicate with you throughout the loan process
• Follow up the lender for you from application through conditional and on to unconditional approval
• Negotiate with their lender or lenders to achieve the best deal
How do I know a mortgage broker is any good?
Establish the right mortgage broker for you and check his/hers experience and qualifications. A good mortgage broker will be committed to the industry’s code of practice. It is vital to ensure you're getting the best loan for your needs. Below is a checklist that will help you know if your mortgage broker is a good person
• For residential loans, all of the mortgage broker's services should be free – remember mortgage broker’s are paid commissions from the lenders
• The right mortgage broker will take the time to really understand your entire finance situation, both now and into the future
• Your mortgage broker should have a range of home loans from a wide variety of lenders, for example, banks and non-banks, conforming and non-conforming lenders
• Check that your mortgage broker is not just an agent for one lender
• Check the qualifications and experience of your mortgage broker, even ask for references from previous borrowers
• Is the mortgage broker a member of MFAA - Mortgage & Finance Association of Australia – and thus bound by its Code of Practice?
• Is your mortgage broker a member of an external dispute resolution entity such as Credit Ombudsman Services Limited – this ensures you have an avenue for free and fair mediation if you do get into a dispute.
• Ensure your mortgage broker discloses all commission and payments received by the lenders • Ask your mortgage broker to show you how the loans they offer compare to your own situation (on a computer).
• Ask your mortgage broker how they comply with the Privacy Act to ensure security of your personal and financial details
• Your mortgage broker should have appropriate insurances (for example Professional Indemnity Insurance Cover)
• A good mortgage broker should be able to explain the most complex loans in simple plain English
In conclusion when deciding upon a mortgage broker make sure you feel comfortable with them, that they are experienced and able to offer a range of loan products – not just those available through the banks. Quite often a mortgage broker will push one particular lender’s products because they know them well - there may in fact be better product out there so make sure the mortgage broker you use is unbiased in his recommendations to you.
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