Understanding Mortgage Broking
Do you need a mortgage broker?
A mortgage broker can be a very useful partner for a first home buyer. The broker will assess your financial situation as part of a 'needs analysis', and match your requirements to a wide range of loans from banks and other financial institutions; managing the process right through to settlement.
Here are some reasons you might consider using a broker:
- Brokers will offer loans from lenders they are 'accredited' with, known as their 'panel of lenders'. These lenders may include the large banks, plus specialist 'non-bank' lenders and mortgage managers.
- A broker will search for a deal that meets the customer's needs, from their panel of lenders. This provides access to a large range of loan options without the customer having to do any of the leg work.
- A broker has access to loan rates at his fingertips, as well as fees and charges so a clear loan comparison can be made.
- Brokers also have a good relationship with lenders so can usually negotiate a very competitive rate. Lenders receive a significant amount of business through the broker channel so it's in their best interest to work closely with brokers.
- The broker's experience in the mortgage industry will help you make informed decisions and allow you to feel confident throughout the process.
- The best news is that generally you won't need to pay your broker: the broker gets an upfront commission from the lender on the loans they settle as well as a trailing commission.
Bear in mind that not all brokers have the same level of qualification or experience. The Mortgage & Finance Association of Australia (MFFA) sets the highest industry standards and its members are required to adhere to a range of Code Practices, laws and regulations. To find an accredited, reputable broker, contact the Mortgage & Finance Association of Australia.
What to expect when you meet with a broker
Will usually take around an hour, and in that time, a qualified broker will:
- Ask what you are looking for in a home loan and understand the particulars of your situation
- Calculate how much you can borrow and what your repayments will be so you'll know what sort of range you can buy in.
- Help you choose the loan and associated features that meet your needs from a panel of lenders.
- Explain the application fees and other charges associated with a loan.
- Explain the home buying process end-to-end including making an offer, getting legal advice, exchanging contracts and settlement.
The broker can also take you through some helpful information like:
The broker will walk you through the application for the loan of your choice—if and when you are ready. Most loan applications can be lodged online, but you'll need to have some documentation and information handy for the broker to see.
The documents you'll need will depend on the type of borrower you are, and the type of loan you're after. Your broker will tell you what you need to submit to the lender you've chosen.
You should feel informed and confident in the next steps in the process when you leave your first appointment. And the good news is, the broker will be with you every step of the way so you never have to worry.
Have a look at these steps to purchasing your next home as laid out by the experts
Continue to information about buying your first home.
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