With so many lenders available in the Australian home loan market, it can be difficult to know your options. This is typically where a mortgage broker comes in. They are experts in home loans and should have a solid grasp of the pros and cons of several lenders. Because of this, they should be able to answer the below questions to ask your mortgage broker.
However, you shouldn’t blindly trust a mortgage broker. The best practice is to ask lots of questions to make sure you are completely comfortable with their advice.
Need some inspiration? Here are 7 questions to ask your mortgage broker before deciding to proceed with their recommendation.
A good mortgage broker would have considered your personal circumstances to ensure that any home loan that they are recommending is in your best interests. Because of this, they should be able to easily answer this question without hesitation.
Essentially, you are seeking to understand why your mortgage broker believes that this home loan is in your best interests.
Caveat – the home loan with the lowest cost is not always the best option for you. With this question, you are looking for your mortgage broker’s understanding of your personal circumstances and how they found the most appropriate home loan for you.
They should be able to either assure you that you have the home loan with the lowest cost available to you based on your personal circumstances, or they can explain why you need a higher-cost option to be able to meet your property goals.
A good mortgage broker will be upfront about how they are paid. It is likely that you may not need to ask this question, however, if your mortgage broker has not been forthcoming with this information, ask away! Mortgage brokers can receive a commission from lenders and some may charge a fee. It’s important that you are fully aware of how your mortgage broker will be paid.
A follow-up question for your mortgage broker is whether the commission they receive differs between the lenders on their panel. It is normal for there to be some slight variation between lenders on a mortgage broker’s panel.
Mortgage brokers have access to a panel of lenders. It is important to know that your mortgage broker has access to a broad panel of lenders so that they have options when considering your personal circumstances. This is also a handy question to understand what other services your mortgage broker may offer. Some may also arrange business finance, car finance, or other personal and commercial lending.
It is also good to know if your mortgage broker specialises in a particular market segment – for example, property investors or first homeowners.
Another follow-up amongst the questions to ask your mortgage broker is “what type of lenders do you not have access to?” This helps you understand whether there are any options completely off the table.
This should be an easy one for a good mortgage broker. They should already have this information documented and their response to this question should reflect that. If they stumble or reveal fees that haven’t been disclosed, then that could be a red flag.
Depending on your loan-to-value ratio (LVR), you may be liable to pay lenders mortgage insurance (LMI). This question should prompt a discussion on whether you will need to pay LMI. Your mortgage broker should also raise exceptions that may be available to avoid paying LMI – for example, some professions qualify with certain lenders for a high LVR loan without triggering LMI.
Paying LMI also makes sense in certain circumstances so your mortgage broker should be able to discuss this at length with you.
There are a few strategies to help you pay off your home loan faster. This could range from using an offset account or redraw facility. It could also include investing in property or other assets in the future. A good mortgage broker will be able to take complex information and communicate it in an easy to understand manner.
This question is also handy to understand whether you can continue to work with your mortgage broker in the future. Is their answer focused on the immediate home loan? Or are they thinking ahead about how they can help you build your wealth over time?
The above is simply an example of questions to ask your mortgage broker. At the end of the day, you must be 100% comfortable with the mortgage broker you choose to work with so invest some time in jotting down the questions you want to ask. Keep asking questions until you are completely comfortable and keep an eye out for any red flags.
Do you have any other examples of questions to ask your mortgage broker? Pop them below, we’d love to see them.
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