When we think of home loans many of us automatically approach our bank, but this may not be our most cost effective option say financial experts. While bank managers can offer you home loan packages that are associated with their bank they cannot look at other lender’s products and offer you an in-depth comparison of these products, however a mortgage broker can.
Mortgage brokers have a greater selection of lending products and many have special skills and greater lending experience than a bank manager. But best of all, they act as a liaison between you and a lender, so you don’t have to waste your time and effort following-up your loan application.
In a nutshell, a mortgage broker offers you the following benefits:
1. A selection of different lender’s products – A broker has a number of lenders on their panel. This means they can offer you more than 50+ lending products. A bank, on the other hand, will typically have 10+ products.
2. Lending experience – Mortgage brokers specialise in home loans and many have been in the industry for years. Bank managers may have been in the lending arena for only a short time due to them being moved around the bank from one position to another. Typically when a bank manager does well this will lead to a promotion. This may mean that your bank manager has very little lending experience.
3. Special skills – Many brokers specialise in certain areas, such as commercial property, residential investment or home loans for owner-occupiers. A bank manager usually doesn’t have the expertise in areas other than residential property.
4. Following-up on a loan application – Following-up your application can be time consuming and frustrating. But your mortgage broker does this on your behalf, they keep you up-to-date and save you time and effort.
5. Your own personal banker – A bank manager will have many other bank tasks to carry out and your loan will be just one of these. Whereas a mortgage broker is focused on home loans and getting approval for your home loan. Therefore, your application will be a priority, not just one of the many tasks that need to be done in a day.
6. Selecting the right broker – Not all brokers are created equally, some are far better than others at doing their job. So how do you know that you’ve selected the right broker for you? Your broker will act as a liaison between you and your lender, they’ll find you the best home loan product based on your personal and financial circumstances. You’ll work with your broker long-term so it’s important that you get along with them well. The best way to determine this is to meet your broker face-to-face.
When you meet with your broker ask them a number of questions to determine their suitability, such as:
How many years experience do you have?
What are your qualifications?
Are you registered with any industry associations or organisations?
Do you have any testimonials from past users of your services?
How do you handle dispute resolution?
What fees do you charge?
Why should I use your services?
What makes you stand out from other brokers?
Your broker should have a National Credit Act Accreditation, a minimum of a certificate IV in Financial Services Mortgage Broking, but a diploma is preferred. They should also belong to either the Mortgage and Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA) and be a member of the Credit Ombudsman Service Ltd (COSL) who assist borrowers with dispute resolution. By law an Australian broker must also be registered with the Australian Securities and Exchange Commission (ASIC) and hold a Credit License (ACL) or be a representative of an organisation that holds a credit license.
Your mortgage broker should be up-to-date with the industry and they should adhere to industry guideline and deadlines. In addition, you should feel confident in your brokers abilities to make decisions and solve problems. A sound mortgage broker will have sound product knowledge, good communication skills and patience. Plus, they should be able to discuss a lender’s products without relying fully on their software. If the broker cannot display these attributes, then it may be time to consider another broker’s services.
Ask the broker who is on their lending panel. Check that these lenders are reputable and that your broker uses a number of these lenders, not just those who pay a higher commission.
You want your broker to recommend products that will suit you and you financial and personal situation so that the product offers you the greatest benefits. So when your broker recommends products ask them why these products, why are they better? Also ask to know who the lender is, what the interest rate is, and the comparison rate, and what the loan offers. Lastly, ask for a print out of the loans you’re interested in so you can take these home with you to review before making a decision.
Brokers typically offer their services for free to a borrower, as they are paid a commission by a lender when you take out a home loan with that lender. However, some brokers may charge you an additional fee. Therefore, you need to ask your broker, before you start asking any other questions, if they charge you a fee.
Would you like to know more about mortgage broking service? If so contact eChoice and we’ll introduce you to a mortgage broker who can help you find the right home loan.