With the competitive market and endless lenders, you might want to look into getting a mortgage broker to help you with the workload. They negotiate on your behalf with banks, credit unions and credit providers to arrange the right home loan for your situation. They will assess your situation and come back with loan options, then help you manage the process of taking out the loan of your choice.
Because they are paid by certain credit providers their advice may be dependant on who they are gaining commissions from so make sure you also do your own research throughout this process. Here is a checklist from ASIC’s MoneySmart guide to help you find a reliable mortgage broker:
- Make sure your credit provider and broker are licensed by searching ASIC Connect’s Professional Registers.
- Find out who your broker is paid commissions from as this will alter what advice they will give you. In the initial meeting stages also ask what loans they offer and if they charge any fees.
- Create a list of criteria you want your loan to meet and make sure they find one that fits as many as possible. Ask for more options if you aren’t satisfied and see how much each criterion will cost to have as part of your loan. You’re list might include some of these features:
– An offset account
– A redraw facility
– The ability to make extra repayments
– The ability to make lump sum repayments
– The ability to split the loan between fixed and variable
– The ability to get home loan pre-approval
- Compare the broker’s recommendations with online comparisons and product reviews.
Get a written agreement to show you clearly the amount, term, interest rate and any fees of the loan. Keep an eye out in the agreement for any mention of broker’s fees or commissions, fees to the credit provider or lender for setting up the loan, and/or any early termination fees.
- If you have any issues or dispute with your broker – find out from ASIC how to complain.
Impact of Royal Commission
The mortgage broking industry came under fire during the recent Banking Royal Commission. As a result, industry associations such as the Mortgage & Finance Association of Australia (MFAA) have launched campaigns to educate consumers on what work is being done to restore consumer confidence. With brokers responsible for more than half of residential property lending, it’s crucial for you to understand how to drive a fair deal on your first loan.