When you meet with a mortgage broker, remember that you are looking for an excellent communicator and an expert who understands dozens of different loan policies.
The Mortgage Broker needs to pay attention to the details to really be able to offer constructive advice.
Look for a mortgage broker with knowledge of the lending industry, including legislative requirements, legal aspects of lending (buying or refinancing properties), tax aspects of investing in real estate, and approval and settlement processes.
MORTGAGE BROKER CHECKLIST
To ensure you get the most out of your relationship with a mortgage broker, you should at least ask a few basic questions:
Which lenders do you deal with? Does the mortgage broker offer a real choice? The lenders available on their panel should be a range of banks, credit unions, and non-bank lenders. The mortgage broker commission rates will also vary, so make sure to ask!
Does the mortgage broker have interest rate comparison sheets and loan information sheets available? These allow you to review each loan product using the same reference loan amounts and terms.
How is the Mortgage Broker paid? In general, all mortgage brokers receive a commission from the lender. The amount of this commission should be disclosed to you in a financial brokerage contract and you should consider whether the recommendation is based on your needs and not on the commission payable.
How are loan products compared? The mortgage broker should talk about interest rates, entry and exit fees, loan features, and credit policy differences for each lender. If not, are they really offering you advice?
Is the mortgage broker a member of an industry group? Dealing with a Mortgage Broker who is a member of an industry group adds protection and a formal complaints procedure.
How professionally qualified is the Mortgage Broker? What experience do they have? Are you dealing with a qualified mortgage broker who is experienced or someone who just started last week? You can ask to speak to existing or past clients to check how the mortgage broker has acted in the past.
Does the mortgage broker have professional indemnity insurance? This gives you more protection as a consumer. Mortgage brokers without this insurance will not be able to submit your loan application to most lenders. Do not deal with uninsured mortgage brokers.
Who will do the credit check? It is important to know whether the mortgage broker will submit your application to more than one lender, as each lender may perform a credit check. This can affect your credit history if you have many recent applications.
Will the Mortgage Broker be able to help you once the application is approved? Mortgage Brokers should be prepared to help you after approval, and even after your loan has settled, so if you get the message that you will be dealing with the lender, not the broker, beware!
If the mortgage broker has a limited panel of lenders, or perhaps only one lender, why? As a consumer, you need to understand why the mortgage broker has made this decision and whether the offer is what you are looking for in a loan product. Complaint Procedures Mortgage Brokers must have a dispute resolution process in place to handle complaints fairly.
Benefits:
Most mortgage brokers will have access to a wide range of lenders and products, offering you a comparison of suitable loans.
They will often meet with you at a time and place that is convenient for you, including by telephone, e-mail, or over the Internet.
Mortgage brokers have access to loan comparison software that can quickly select a shortlist of loans that meet your key requirements.
Some broker groups offer a fixed commission to their mortgage brokers regardless of the lender chosen, so the mortgage broker is not motivated by higher commissions.
Some Lenders offer special rates and products only to the Broker market.
Mortgage brokers understand the lender’s credit policy and will not place you with a lender they believe will not approve your loan.
Disadvantages:
Mortgage brokers are paid on commission, so the larger the loan, the more commission they receive.
Lenders often offer promotions to Mortgage Brokers to attract additional business. Will you get the best loan offered or the flavor of the month?
Mortgage Brokers are often prevented by Lenders from submitting offers to your existing Lender. Lenders regard clients as their own and do not allow the mortgage broker to offer different loans, forcing the mortgage broker to offer loans from another lender. In general, mortgage brokers offer a good service that benefits both you and the lender.
You should always compare offers, but do not apply to more than one mortgage broker or lender as this could damage your credit record.
