Five things to look for when choosing your broker
A good mortgage broker can be the key to your property portfolio success. Here’s how to find one.
Mortgage brokers worth their salt will look to build a trusted relationship with you – one that’s more focused on service than selling. Here are five things to look for when choosing your broker.
Asking your personal network for referrals is a good starting point. This could help you find a local broker with experience working with borrowers at your life stage, for example.
Talking to previous customers can also provide valuable insight into working with the broker through the loan application process and post-settlement. Many brokers will stay in touch after the loan has gone through, seeking to maintain a relationship with their clients and help with future lending needs. They may do this through phone or email and may provide information on topics of interest or send invitations to events.
2. Personal rapport
To help you achieve your goals, a reputable broker needs to take the time to get to know you and to understand your personal and financial circumstances. Relaxed and open communication is key, so it helps if you feel rapport with the individual.
A successful client-broker relationship is collaborative – it’s a partnership where you feel comfortable, confident and in control. You should never feel rushed or pressured into borrowing more money than you’d like. Your broker should be readily contactable, encourage your questions and be able to answer them.
You can also ask a prospective broker about their business as well as the loan process: how long have they been in operation and who are most of their clients? Get as much information as you need to judge whether the business is a good fit for you.
3. Selection of lenders
Ideally your broker should have access to an extensive panel of lenders covering banks, non-banks and building societies. They should also be equipped with the tools to sift, sort and select the loan products suitable for you.
A good mortgage broker has a thorough knowledge and understanding of the products that meet your needs and will be able to explain why they are suggesting a particular loan to you.
4. Professional expertise
A reputable broker will help you understand how much you can afford to borrow and how this affects you now and into the future. They’ll provide written documentation to demonstrate how different scenarios – loan terms, interest rates, additional loan features and fees – affect the amount you pay over the life of the loan. They’ll also take the time to ensure you understand the loan process and all the terminology that goes with it.
As per ASIC requirements, all mortgage brokers must be authorised to provide credit advice by an Australian Credit Licensee holder. As Australian Credit Licensee holders or credit representatives, all brokers are required to undertake professional development activities each year. Meeting the minimum training requirements ensures that they adhere to a strict ethical code of practice, to further meet their client’s needs.
Most brokers are members of Professional bodies such as Mortgage & Finance Association of Australia and Finance Brokers Association of Australia. Through this association brokers have access to a wide range of professional education opportunities each year and minimum standards to meet.
5. Disclosure of fees and commissions
A broker is required by law to clearly explain and demonstrate how they are remunerated. In Australia, lenders typically pay brokers through upfront and trail commissions, rather than clients paying a fee directly to the broker.
Finding the right mortgage broker could be all that stands between you and your property dream. By keeping these tips in mind when talking to prospective broker partners, you could be on your way to property-purchasing success sooner rather than later.