You’ve made the decision to buy a home and now the hunt is on not only for a house but for someone to help you find a loan. This is when a mortgage broker comes into the picture. If you’ve never dealt with these financial advisers before, here are some good questions to ask them.
Mortgage brokers are the financial mediators between you and a bank or lender. They’ll examine your cash and credit situation and advise you of the best home loan to suit you. You don’t have to utilise brokers but they can be good value, especially if you’ve never bought before. And too, you’re about to pay big money in one of the most important decisions of your life. So, in this sense, mortgage brokers could be the way to go.
First thing’s first: is your mortgage broker licenced and registered with the Mortgage and Finance Association of Australia (MFAA)? If they’re not, walk away now. They should also be professionally registered with the Australian Securities and Investments Commission (ASIC), have an ABN number and an Australian credit licence. Ask your broker how long they’ve operated for, how many loans they’ve written in this time, and what type of clients they specialise in. Don’t forget that if you’re not happy with a broker at any time, you can open the door to another broker’s office.
Lender panels and paperwork
Your broker doesn’t have to represent a massive panel of lenders. But after the above questions, your next enquiry should be what lenders they represent. These lenders should be a blend of banks and non-bank companies plus building societies. Remember also that brokers should be well aware of the industry’s latest trends and products. Once you’re both on the same page, ensure you know exactly what paperwork is needed to have your mortgage approved. Have your broker write you a full list of every document you need, not just for the home loan process itself but for every step of the way in this potentially scary purchase process. And you’ll want this list written in plain, simple English too!
Does this loan suit me?
At this stage of the game, your broker should have asked you plenty of questions about your financial and general situation; handed you easy-to-understand lists of everything you need to enjoy a great home loan, and more. In the end though, you have to be happy with the loan your broker offers. Don’t be afraid to ask them plenty of questions about it. Why do they think it’s perfect for you? What are all the benefits, costs and risks? If you’re not sure about any point, express your concerns. As well, check on different interest rate terms such as fixed, variable, interest-only, guarantor and honeymoon. These points are crucial to understand as they’ll establish both your monthly repayments and total loan cost.
On the home run
You’ve accepted and agreed to all of the above but there’s still some details to think about. For a start, there are three levels of lender approval to consider: instantly obtainable but not binding pre-approval; conditional approval, which usually takes about two to three days to arrive and needs an application form and documentation; and full approval. This final approval sees the lender giving you and your dream house the seal of sanction. You can now officially make an offer on the house or attend an auction but bear in mind, full approval can take five to seven days to acquire. An evaluation of the property is often also needed. Finally, once you’ve agreed to the broker’s suggested loan, submitted your application details and a fee to the lender, it’s official. You’ve accepted the loan offer and backing out now could see your fees not refunded. On the other side of the coin, you could soon find your application accepted and be moving into a fantastic property.