When you get down to it, property – whether as an investment or a home – is all about finance. Unless your personal wealth runs extremely deep, there’s a good chance you’ll need to borrow money to secure your real estate.
Borrowing to buy is sensible of course. If you wisely invest the funds, it’s highly likely your property will return far more than the loan’s interest rate.
But dealing with the financial world is a complex experience for the average borrower. Back in the old days of banking, getting a mortgage might have been as easy as grabbing a cup of tea with the local branch manager and convincing him you were a good bet.
But times have changed. Australia’s lending landscape is now far more rigorous. While this has helped our national finances stay strong during testing global economic conditions, the level of scrutiny applied to loan applications is incredible.
And it’s not just about filling out the form. Most borrowers need to prepare well in advance when applying for a loan. They must line up all the necessary documents and financial details. Many also need to take steps early on by implementing strategies months in advance of their submission to the lender. Moves such as slicing up credit cards or establishing a manageable home budget will be necessary for some.
Then there’s the range of loan products on offer. All sorts of complex options depending on whether you’re a new or established borrower, what you’ll need the funds for and which stage of your investment journey you’ve reached.
Who has the time, experience or networks to deal with all of that?
That’s where the mortgage broker comes in.
Mortgage broking in Australia may have started in the late 1980s, but it’s only hit its straps as a go-to profession in the past 15 years or so. Now more than 70% of all loans written in this country are broker originated.
Of course, not all mortgage brokers are created equal. Finding the best in a crowded field can be challenging.
So, how do you locate the best mortgage broker for your needs?
Experience is essential when selecting a mortgage broker in Australia.
It’s best to work with well-established brokers who have been successful at what they do for many years. Look for organisations that devote time and resources to training and supporting their up-and-coming staff, with leadership that has a track record of success.
Also, seek mortgage brokers with experience in securing finance that meets your needs. For example, if you’re planning on developing a small unit project, don’t use a mortgage broker who only knows about finding finance for homebuyers. If you’re an investor with complex legal structures, then seek a mortgage broker who has worked with similar borrowers in the past.
I also believe mortgage brokers who’ve previously worked in the banking industry are worth their weight in gold. These brokers understand how the lending process proceeds and the best way to operate within that system on their client’s behalf.
Networks and connections
Mortgage brokers with a wide network of professional contacts can deliver superior service. These are specialists who’ve spent years building relationships with a stable of affiliates. They could be in legal, accounting or financial planning, or even be real estate agents and buyer’s agents.
You can utilise a brokers’ recommendations to ensure you’re securing the best possible assistance when it comes to a property deal.
Also, mortgage brokers in Australia who deal with only two or three different lenders aren’t normally as effective as those who have a wide range of financiers to source loans from.
Having a bank of lenders with a variety of products delivers choice to the client. Your mortgage broker will be able to look at your circumstances and steer you towards the best possible options for your scenario.
Professional associations and education
Education, licencing and professional association membership are all key when it comes to mortgage broking.
Brokers need to be licenced by ASIC and must hold as a minimum a Certificate IV in Mortgage Broking to practice as a professional.
Mortgage brokers must also be members of either the Mortgage and Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA).
Professional association ensures your broker operates within a code of conduct, otherwise they risk disciplinary action. Customers can also feel confident that these professional associations will deliver educational opportunities to their broker members, thus ensuring continued professional development.
Both the associations above can be contacted by borrowers to ensure their preferred broker is among the membership.
There are few things more valuable than a ringing endorsement from a broker’s previous clients. If you are seeking a mortgage broker, ask those in your circle who they’ve used.
It’s particularly handy to ask others who invest in property similarly to you. If you are a member of an investment or property group, ask others in that cohort for a recommendation.
Finding a great broker requires a little effort on your part, but it will pay handsome dividends in terms of finance success. If you’re looking to secure funds for your next purchase, why not reach out to our team at Intuitive Finance for a chat.
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