Even for those of us with finance backgrounds, loans can be seriously confusing.
A full understanding of the features, benefits and penalties in a loan is critical to making sure you choose the right one for your circumstances.
Selecting the wrong product can be a mistake worth many thousands over the life of the loan or in exit fees.
A good mortgage broker helps you understand how much you can borrow, the pros and cons of the various products available and then guides you through the application and settlement process.
I'll always recommend my clients chat with a strategic broker to make sure they're getting access to the best possible product for their circumstances.
I recently chatted to Dave Henderson, Lending Manager at AQUA Financial Services about pre-approval times, lockdown impacts and borrowing limits.
Click on Dave's image to watch it.
Here's some FAQs for those unfamiliar with mortgage broking.
What’s a mortgage broker?
A licensed professional whose job it is to connect borrowers to the best lending product for their circumstances.
What does a mortgage broker do?
A broker takes time to understand your circumstances and prepares a shortlist of suitable products from a large variety of lenders, explaining each one. They will help you navigate the credit approval process with the lender and follow it through to settlement. A good broker will review your loan every year to ensure you're getting the best deal.
How much does a mortgage broker charge?
Mortgage brokers are paid a commission by the lender at the initiation of the loan and an amount every year after. They must disclose how much their commission is with each lender.
If they’re paid a commission, how can they be objective?
Brokers face huge fines (over $1m) if they do not act in their client’s best interests.
Who should use a broker?
Anyone who wants to feel confident that they are getting the best product for their circumstances and who does not have time or skills to do the large amount of research to understand all the products available. In particular, borrowers who do not fit into the mould of PAYG employees with good credit histories have a better chance of finding a lender through a broker than on their own because of brokers' large network of lenders and products to draw on.
What should you look for in a broker? Your broker should have a Certificate IV in Finance and Mortgage Broking and have an Australian Credit License (ACL), supplied by ASIC (or work under a Licensee). They should have access to a broad array of lenders from bank and non-bank lenders so as to bring you a good choice of products.