Working With Mortgage Brokers

Due to the often complex range of home loan options, working with a mortgage broker is becoming increasingly popular.

Though banks have been regarded as the bastions of home loan respectability with runner up status going to the array of mortgage brokers, Australia industry body, Mortgage & Finance Association of Australia (MFAA) provides guidelines covering advertising and commissions and some states have introduced Finance Broking Contracts, increasing industry accountability and borrower security.  

As the array of home loans becomes increasingly complex, more consumers are turning to home mortgage brokers to assist in securing the best deal. Home loan brokers have already compiled an extensive list of their favourite lending institutions including the loan options, terms and conditions and interest rates. The problem borrowers then face is which home loan broker to choose.

A mortgage broker is ‘the middle man’, and a business, therefore does receive commissions for services as their income.  While many brokers work to offer beneficial loan packages, not all companies operate by the same standards, so borrowers should exercise caution and shop around.

Five Top Points When Working with Mortgage Brokers

  1. Conduct your own market research first so you start the relationship with some ball park figures. Make a list of questions specific to you then contact a number of brokers to find the one that suits you best.

  2. Understand what the fees and commissions entail and which lending institutions the broker deals with and why.

  3. Never pay up-front fees. It is illegal in some states and most reputable brokers do not request them. Check the figures carefully, after all, everyone’s human and mistakes can be made. Don’t just assume.

  4. Ask for full explanations as to why a particular policy suits you best and be sure to be completely upfront with your broker about your financial standing. Remember, it’s a two-way street.

  5. Don’t be afraid to get independent legal advice before signing anything, and get everything in writing.

Mortgage brokers are often happy to discuss options for those with credit problems or a bad credit history. While these kinds of bad credit loans, often called non-conforming loans, give borrowers a second chance to establish a good credit rating, borrowers should always be aware that higher interest rates and deposits may apply, therefore they need to be doubly sure of their ability to repay the loan.

Like all institutions, mortgage brokers have a place in assisting borrowers to achieve their home ownership dreams. The trick comes in choosing the best mortgage broker and the best deal.