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A home loan is the most significant financial investment most people will ever make. But, unfortunately, it can also be the most difficult to navigate. This is primarily due to the vast number of loans, interest rate variables and conditions available.
This is where a mortgage broker comes in.
So, where should you start when searching for a mortgage broker? And what should you avoid? Read on to learn all you need to know about this important step.
The job of a mortgage broker is to sift through the available home loans for your situation and budget needs, applying and researching on your behalf. With so many banks and lenders within the property market vying for your attention, a mortgage broker can help curb your overwhelm and clarify your decision.
After all, choosing the right loan with affordable fees and interest rates for your budget and circumstances is one of the most important parts of budgeting for your new home build.
Once you’ve chosen between a mortgage broker or direct lender, selected your home builder, bought your land and filled your Pinterest board with new home inspiration, you might feel like you’re running out of decision-making energy. However, there are a few more decisions to make. A significant one is choosing the right mortgage broker. Unfortunately, they are not all made equal and are not all suitable for your situation.
Let’s take a look at each of these steps in more detail…
You will need to do a little bit of homework before signing on with your mortgage broker.
First, check out some of the loan features and loan products on offer so you have a good idea of the market, and contact several mortgage broking companies to see what they can provide. Be prepared to scrutinise their recommendations and look for one that will find the best option for you, not one that will simply get approved.
Most brokers get paid based on a commission basis. If your broker only accepts upfront commissions, this may influence them to recommend a larger loan than you’re comfortable with. A trail commission, on the other hand, provides payment to the broker over the life of the loan, which is more comfortable for many home buyers.
At the very least, your mortgage broker should have the right licensing to provide you with a loan. This should be clearly displayed or easily accessible. In addition, they should have an Australian Credit License to act as a credit representative. Look for mortgage brokers with a Certificate IV in Finance and Mortgage Broking or higher-level education in finance, economics, or accounting. Additionally, your broker should have interests and experience in your situation.
Brokers are limited to their own lists of banks and connections, and some may even be owned by bigger banks. A good broker will have a range of options for you without bias.
Don’t make your decision too quickly, and don’t be afraid to ask questions. How clearly your broker explains things to you and how many options they’re willing to present can tell you a lot about what they will be like to work with.
Choosing the best, most suitable mortgage broker for your home loan comes with some homework. The best way to begin your research is by comparing a few top contenders.
When evaluating your options, ask your mortgage broker the following questions:
Choosing a home loan is serious business, and it can have the power to make or break your financial situation. Your mortgage broker will select the deal that will save the most money in the long run, particularly for inexperienced home buyers prone to signing up for the first loan that says ‘approved’.
The home loan process can be very time-consuming. There are many phone calls, emails, meetings, and paperwork required before approval. Sorting out your mortgage can start to feel like a full-time job (on top of your actual full-time job!).
When using a broker, you will discuss requirements and submit paperwork only once, letting them do the legwork of researching and applying.
Unlike the step thousands of people take to apply through their local bank when using a broker, you will have a much wider pool of home loan options to choose from, including some you may not even know about. This can help you to secure a better option with features and products that suit you perfectly.
Applying for multiple loans can take its toll on your credit score, and brokers have all the latest tips, tricks and insights to assess your borrowing power and get you approved without sifting through denials first.
Sure, Google provides a lot of information on comparing different home loans. However, it can quickly become overwhelming and difficult to understand. If you’re time-poor or simply don’t want to spend your weekends researching repayments, fee structures and comparison rate calculators, a mortgage broker can provide the perfect solution.
A mortgage choice comes down to more than fees and interest rates, and your broker will understand all the subtleties of what will eventually impact your bottom line. This can help you avoid mistakes and make the most of opportunities.
Many different fees exist when signing onto a new loan product, from the application fees to the appraisal fees. Your broker can navigate these for you, sometimes even negotiating with the relevant bodies to eliminate the fees altogether.
Choosing the best mortgage broker, loan officer, or lender can make a real difference to the home buyer, whether the property is their first new home build, investment property or future source of passive income.
Our experience in the custom home building industry means we have seen it all when it comes to mortgages, and as a result, we can offer up-to-date advice on the best way to navigate your borrowing journey. Get in touch with our experienced and friendly team of today to discover how we can get you closer to making your dream home come to life.
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