Tips for selecting a Mortgage Broker

 Tips for selecting a Mortgage Broker

Mortgage brokers can save you hours of legwork, save you heaps of money and help you find the loan that suits your needs best. But it pays to be cautious and do your checking when selecting the right broker and loan for you.
A mortgage broker's role is to work with individual consumers to determine how much you need to borrow and whether you can obtain that amount. They will then help you select the most suitable loan from a variety of sources and assist in managing the loan process until final settlement.
Industry accreditation
Standards of training vary widely across the mortgage broking industry. So choosing a broker with an industry accreditation, such as belonging to the MFAA (Mortgage and Finance Association of Australia), will mean they are obliged to adhere to an industry Code of Practice and maintain minimum standards. Ask your family, friends or colleagues if they can recommend one and check their industry accreditation before commencing.

Fees

Brokers are remunerated by a commission from the lender and other benefits, so their service should not cost you anything. Paying an upfront fee to a broker is not standard industry practice and is potentially illegal in some States. You should not pay any fees at all until your loan is approved.

Borrow only what you need

This applies equally whether you borrow through a broker or go direct to the lender. The more you agree to borrow, the higher the commission the broker receives. Don't be swayed if they encourage you to borrow more than you need; it just puts you further into debt and places you at higher risk of defaulting on the loan.

Find the right loan

Brokers are expected to have a greater knowledge of the types of loans available compared to the average consumer. A loan will be selected from their panel of lenders, which varies in size from broker to broker. The panel contains all of the banks, non-bank lenders and mortgage managers from which they will source loans. As a general rule, the wider that list the greater your options. You can ask to see a broker's lender panel list.

Read the fine print

Your broker should be clear and upfront about all of your loan terms and provide them in writing. This information should include the loan amount, the loan term, interest rate, loan establishment fees, any fees for a redraw facility or any exit fees. Similarly, you may ask for a copy of the broker’s Credit Assessment that confirms that the proposed loan is not unsuitable for you.

Complaints

If you're not satisfied with the conduct of your mortgage broker, you can complaint to the broker. If you are not satisfied with the response you receive, you may refer your complaint to an external dispute resolution scheme. These bodies deal with disputes and will fully investigate your complaint. They can make findings and determinations that are binding on the broker. The two most relevant schemes are the Credit Ombudsman Service (www.cosl.com.au) and the Financial Ombudsman Service (www.fos.org.au).

If you find this article useful, please feel free to link to this page from your website or blog.

URL:

HTML Link:

Forum Link:

Widget by BloggerTipAndTrick