KEY TAKEAWAY: Don’t be scared to ask your broker all the important questions about their job - remember, it’s your investment and your money on the line.
Buying a home is one of the biggest purchases you’ll ever make, so trusting a professional to take care of your hard-earned dollars is a big deal. Before you sign up with a broker, it helps to make a few enquiries about their background, experience, and fees. Choosing the wrong broker can be costly, so asking the right questions will ensure that you engage a broker who has your best interests at heart.
Treat the process like an informal interview. After all, you want the best person for your business. Below are 7 questions to ask your broker:
- “How much experience do you have as a mortgage broker?”
Your broker should produce certificates confirming their qualifications and memberships. This includes an Australian Credit Licence, a criminal check, and professional indemnity insurance.
- “How many lenders do you have on your panel?”
The broker should include a combination of traditional and non-traditional lenders. Also if they have more than 20 lenders on their panel, you know they will have more options for you.
- “How much will it cost me? Is your service free?”
Your broker should be transparent in explaining how they get paid. Primarily, they get a small commission from the lenders that you apply for once approved. Most mortgage brokers virtually work for free, so it won’t cost you anything in order to get this professional service.
- “Why should I choose you over another mortgage broker?”
This goes without saying, but a broker who can’t answer this question honestly is not worth your time or your business. Hearing their wins and difficult experiences first-hand will help you gauge their professionalism and willingness to help you get where you need to be.
- “How long will it take to process my loan?”
There are five steps in the application process: conditional approval, formal approval, contract preparation, signing the contract, and settlement. Each situation is unique, so there’s no set time on the loan process, however your broker should be able to give you a good estimate of how long each step will take.
- “Do you specialise in any areas?”
The broker ideally would deal with clients just like yourself. There’s no point using a broker who usually works with multi-million dollar mansions when all you want is an affordable family home. Similarly, if you are self-employed, your needs - and lending circumstances - will be different.
- “Is there a fee to make additional repayments?”
For fixed loans, your broker should tell you that you may not be able to make extra repayments without penalty. However, there may be ways around this. They should also tell you whether there is a cap per calendar year on how much extra you can repay on your mortgage.
If you have any doubts or hesitations about your broker’s responses, thank them for their time but continue to look for other brokers. Mortgage brokers are there to help you choose the right home loan, so ensure you choose the right professional to represent your best interests.
It is important to remember that you continue to ask questions on your first meeting and throughout working with your broker so you can get the best service possible.