Getting the right result for your home loan is easier when you ask the right questions.
Going to a mortgage broker is like visiting a fortune teller: you’re hoping for good news about the future, but you also want to know what’s coming so you can be ready. You’ve probably got similar thoughts about arranging your first home loan. You want to buy the perfect property but you don’t want any nasty surprises waiting for you after settlement.
Aussie broker Janine Ashmore has been in the home finance business for more than 12 years. From her Darwin office, she helps all sorts of people secure the right loan for buying a first home. She knows from experience how important that first meeting is for finding out about your mortgage options. Here are six questions you should ask.
1. Tell me about your qualifications and training?
A mortgage is a big commitment and having an expert broker to advise you can not only save you money, but can make things a lot less stressful as you’re applying and long after you’ve moved in. Ongoing training is important too as it keeps brokers up to date on the latest industry changes that could have an impact on your loan and finances.
“Aussie provide great support to their brokers,” says Janine. “They place high importance on continuous training so we can offer the best service and choices to borrowers. Aussie Brokers also have to be Diploma Qualified.”
2. Is there a fee for your services?
It’s standard practice among mortgage brokers to provide their services free of charge. So if a broker is charging you for their time, you’d be wise to find out why they’re taking a different approach.
“A lender pays for our service through a small commission,” says Janine. “And that’s because we’re making things faster and easier for all parties, including their mortgage team.”
3. How much can I afford to borrow?
Understanding what you can afford is important so you can be shopping in the right ballpark for your first home. But your broker should also be steering you towards a manageable mortgage that won’t stretch your finances to the limit.
“If a broker is doing their job, they’ll want to find out about your current household budget,” says Janine. “If they just tell you the maximum amount you can borrow based on your income, they could be setting you up to eat noodles for years once you start paying your mortgage.”
4. What’s the best rate available?
Getting the right interest rate matters, because it’s going to save you money as you pay off your loan. But other lending conditions on a low rate loan might mean it’s not the one for you.
“If your broker only talks about getting you the best rate they’re not really using their knowledge – about lending policies and your needs as a customer – to offer you some really good mortgage options,” says Janine.
5. What are the upfront and ongoing fees?
In addition to getting the right rate, you can sometimes get even more interest savings from other loan features, such as having money in an offset account or making extra payments.
“Extra loan features can be worth the additional fees,” says Janine. “But only if you’re really going to use them. A broker can help you figure out if you need a package loan or just a simple product with a low rate.”
6. What happens if I change career/get married/start a family?
Understanding your 2, 3, 5 and 10-year plan is the mark of a good broker. Their advice about your budget and the right products and loan features should all be guiding you towards choosing a mortgage that doesn’t limit your future lifestyle choices.
“I want to offer my clients the right option for now and the future, even if that means they wait a while to get that first home and mortgage,” says Janine. “Sometimes waiting means they’ll buy the right home and be better off as a result.”
Speaking to an Aussie Broker can help you choose a home loan that will fit with your plans, not the other way round.
What was the most important question you asked your mortgage broker? Tell us about your experiences in the comments below.