A good mortgage broker makes your home loan application easier and more likely to be approved, so it’s important to find the right one. But what makes a good mortgage broker?
A good mortgage broker is recognisable by certain tell-tale signs of how they do business. If you already have a broker, knowing these signs can help determine if you’re receiving quality service. If not, it’s worth considering other options to get a better deal in the long run.
So what does a good mortgage broker look like? Keep these signs in mind when you start talking to and comparing brokers.
When you’re first choosing a mortgage broker, it’s important to know mortgage brokers are strictly regulated by the Australian Securities & Investment Commission (ASIC) plus other governing bodies. They must operate under an Australian Credit Licence (ACL) from ASIC or be a Credit Representative of a Licensee.
Licensed mortgage brokers are legally bound by the ‘Best Interest Duty’, which is a statutory obligation to act in the best interests of their customers. Different legislation also binds mortgage brokers to meet responsible lending obligations.
It’s easy to find out if a mortgage broker is licensed before meeting them. ASIC Connect has an online database of Credit Licensees and Credit Representatives where you can check if your mortgage broker is registered.
A good mortgage broker doesn’t just hold a licence. They’re also members of a professional industry organisation such as the Mortgage and Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA).
Joining and maintaining membership to these associations is a stringent process. The FBAA, for instance, runs annual credit, police, and bankruptcy checks on its members, and ensures they’re properly registered. It also requires members undertake regular professional development and education.
While joining an industry association isn’t a legal obligation, it’s a healthy sign of a mortgage broker’s professionalism and commitment to good practice.
Experience is worth its weight in gold in mortgage broking. There’s no hard and fast rule for how much is best, but brokers with at least 5 years’ mortgage experience under their belt are likely to have encountered a range of client circumstances, including complex cases like poor credit ratings or refinancing. They have the knowledge to recommend appropriate loans for your situation as they’ve probably dealt with similar ones.
Experienced brokers are likely to come with a wider pool of lenders and industry contacts, and exposure to the complexities of the mortgage industry equips them to handle anything unexpected should it arise.
Anyone who provides credit or credit advice, like a mortgage broker, is required to give you their credit guide. A good mortgage broker will give you their credit guide before working with you as a customer.
A credit guide contains a mortgage broker’s licence number, professional background, a list of their services, plus an outline of the commissions they are likely to receive and any fees you must pay to them. It also provides details of their membership to the Australian Financial Complaints Authority’s (AFCA) external dispute resolution (EDR) scheme, a service for resolving complaints between customers and its members. Mortgage brokers are obliged to join AFCA to meet their licence requirements.
A lender panel is a mortgage broker’s list of the lenders that they deal with such as banks and credit unions. A good mortgage broker has a diverse panel of quality lenders, and while there’s no rule as to how many is best, a larger panel will potentially give you more loan options to choose from.
As a guide, brokers typically have lender panels of around 30 or more. It’s important to make sure your mortgage broker sends loans to a range of these lenders, not just two or three with the highest commissions. Experts advise asking your mortgage broker for the top 6 banks they use and the percentage of loans they send to them. This shows if your mortgage broker is likely to offer a broader range of loans from various lenders. You can usually find a mortgage broker’s lender panel on their website.
When you’ve found a good mortgage broker, your first meeting will be about you. From the start, a good mortgage broker takes the time to understand your circumstances and objectives before offering any advice. They’ll ask questions about your current finances, career, lifestyle, and long-term plans – not just when you plan to buy. This bigger picture information helps mortgage brokers find suitable loans and tailor advice for your future benefit.
Be wary of mortgage brokers who claim to know the mortgage you need or offer you loans before asking any questions. It could be a red flag for a generic approach to lending that may not return the best result for you in the long run.
Comparing home loans is a complex process. A good mortgage broker will give you all the information you need in an understandable way so you can make informed decisions. Their advice will be clear, thorough, and free from jargon, and should make you feel more confident about your choices. As they guide you through the application process, a good mortgage broker will keep you updated on its status as well as any other developments.
Good communication is also about responding to your emails or calls promptly. A good mortgage broker won’t disappear or make you chase them but will answer your queries asap.
Good mortgage brokers offer more than just low interest rates. Their advice covers the whole home financing process. This includes potential hidden costs like Lender’s Mortgage Insurance, legal fees, and moving costs, as well as any government schemes or grants you may be entitled to.
A good mortgage broker will offer you multiple home loan options from a range of lenders and talk you through each one. They’ll advise on term limitations, fixing periods, and reveal any upfront costs. Breaking down features such as interest-only, redraw facilities or offset accounts, a good mortgage broker will help you weigh up all the pros and cons and workshop multiple scenarios so you can pick the right options for you.
Most importantly, a good mortgage broker will explain their reasons for recommending certain loans and features over others. If they can’t tell you why an option suits your specific circumstances or how it will be of benefit, then they may not be putting your interests first.
Above all, a good mortgage broker goes the extra mile for their customers. They’ll try to find you competitive deals by comparing products from lenders, and work tirelessly to solve any issues.
A good mortgage broker also ensures the loan is closed on time. Failure to close on time can be costly as a borrower, could result in missing out on an opportunity to lock-in a competitive interest rate or lose title insurance. If the loan is rejected, a good mortgage broker will advise on how to manage your finances to help you towards reapplication. They’ll also stay in touch after settlement and check up on the health of your loan.
Remember, there’s no need to stay with a broker you’re unhappy with. As long as you don’t have pre-approval on a loan they helped you apply for, you’re free to compare brokers and find a better one.
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Property reports contain property estimate data and information provided by RP Data Pty Ltd trading as CoreLogic Asia Pacific ABN 57 087 759 171 (CoreLogic) and OpenAgent Pty Ltd, which is general in nature. It is not a professional property valuation or advice to be relied upon. The actual market value of the subject property may differ. We and CoreLogic do not warrant the accuracy, currency or completeness of the data and information to the full extent permitted by law, each excludes all loss or damage howsoever arising (including through negligence) in connection with the information. You rely on the property estimate at your own risk.
Doorsteps Finance Pty Ltd ACN 648 541 879 (Doorsteps Finance) is a credit representative of Doorsteps Solutions Pty Ltd ABN 60 654 334 246 and Australian Credit Licence 537369 (Doorsteps Solutions).Any credit application made through Doorsteps Finance Pty Ltd is subject to approval, terms and conditions, fees and charges.
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Disclaimer: Property reports contain property estimate data and information provided by RP Data Pty Ltd trading as CoreLogic Asia Pacific ABN 57 087 759 171 (CoreLogic) and OpenAgent Pty Ltd, which is general in nature. It is not a professional property valuation or advice to be relied upon. The actual market value of the subject property may differ. We and CoreLogic do not warrant the accuracy, currency or completeness of the data and information to the full extent permitted by law, each excludes all loss or damage howsoever arising (including through negligence) in connection with the information. You rely on the property estimate at your own risk.
Disclaimer: Doorsteps Finance Pty Ltd ACN 648 541 879 (credit representative no.531036) is authorised under Doorsteps Solutions Pty Ltd ACN 654 334 246, Australian Credit Licence 537369. Any credit application made through Doorsteps Finance Pty Ltd is subject to approval, terms and conditions, fees and charges.