An increasing number of Australians are using a mortgage broker to help them navigate the diverse range of home loans on the market today – whether buying a property or refinancing. Regardless of whether buying for the first time or refinancing, a broker can assist you to find the best deal that suits your circumstances.
Mortgage brokers deal with a variety of lenders from the big four banks through to smaller institutions and will take a lot of the legwork out of the investigation process, offering you a suite of the best options to consider. This not only saves you time but can also save you money – you don’t have to pay the brokers anything for their services, as lenders pay commissions to them.
However, when you engage a broker, it is important too that you use someone reputable – do your research prior and ask them some fundamental questions.
What’s the lowest rate for me?
The only relevant rates are those you qualify for. A broker’s answer will depend on your income, credit rating, whether you are looking to buy a house or apartment, and whether or not it’s an investment property. Often the lowest rate comes with the highest fees, so stay open to the possibilities presented.
Should I go for a fixed rate?
In this environment of flux, where interest rates are going to move up – this is a very important question. Your broker will explain the pros and cons of both fixed and variable rates. They’ll also talk to you about a split loan and other options, like an offset account or setting a rate lock that your interest doesn’t change prior to purchase.
What’s my minimum deposit?
The answer will depend on each lender’s approach to risk. If you can’t raise a 20% deposit, you may be asked to pay Lenders Mortgage Insurance, to protect the lender if you default on the loan.
What are the fees?
Your broker will explain the fees applied to any loan they recommend. These may include penalties for switching loans mid-term or even paying the debt off ahead of schedule.
What’s the deal with your commission?
It is perfectly reasonable, in the interests of disclosure, to ask your broker how they earn their commissions and who is responsible for paying them.
Do you have insurance?
Every broker must have professional indemnity insurance. If they make a mistake, or give faulty advice, the insurance ensures you can be financially compensated if you make a successful civil claim.