In every industry, there are good operators and not-so-good ones, but you can decipher which one is which if you know what to look out for.
The home loan sector has changed dramatically over the past 20 years with more than 54 per cent of all mortgages now being managed by brokers.
Before choosing a mortgage broker, however, it’s imperative that you do your research and the first cab off the rank is to check that they’re members of one of the two professional associations.
In Australia, these are the Finance Brokers Association of Australia (FBAA) and the Mortgage & Finance Association of Australia (MFAA). Every mortgage broker who is trading should be a member of one of these organisations.
Buying property can be one of the biggest financial commitments people make in their lifetimes so it makes sense that you complete due diligence before selecting a mortgage broker to work with.
You should understand their reputation and their credibility in terms of industry awards and recognition. You must also consider what sort of property loan you want to apply for because many mortgage brokers are specialists in particular areas.
At Intuitive Finance, for example, our strengths are in loans for the self-employed and for investors. This is a niche that we have developed over our many years in the mortgage broking business.
So, if you’re a first homebuyer and you’re going to a investment-savvy mortgage broker, they may not be the best broker to use for your specific circumstances, unless your first property is an investment.
New mortgage brokers are usually generalists because they done the skills or haven’t had the experience to learn which part of the sector they are most suited too. Over time brokers generally become specialists in particular fields so it makes sense to use the person who is an expert in the type of lending you require.
If you look at the medical world, they send you to specialists in every field. So, if buying a house or an investment is going to be the biggest financial decision in your life, I’d much rather be dealing with a specialist, wouldn’t you?
At Intuitive Finance, we call ourselves financial strategists and not mortgage brokers because we prepare a full strategy which can help our clients both for today and also well into the future. Personally, I’d much rather have a strategist than just an “order-taker” on my financial side.
A good mortgage broker will display all of these attributes (and some more, too), but what about a bad broker? What are the risks of using someone who isn’t at the top of their game?
In my experience, bad mortgage brokers may not be able to negotiate the best deal for you, because they will probably have lesser volumes and therefore less ability to negotiate the best outcome.
You may also end up with a product that’s just not suitable for you. The law dictates that all a broker has to do is to put a client into a facility that’s not unsuitable but that doesn’t mean that all of them are suitable.
Also, a bad broker will likely not investigate whether what you think you want in a loan is actually the right strategy for you. What I mean is that some people think they need to chase the best interest rate, but they’re earning big money and have got a huge savings capacity, so an offset account will be a far more beneficial product than a low-rate loan.
It’s about getting all the pieces of the puzzle together and making sure that the broker that you’re working with is asking you the right questions and not just being an order-taker. A good broker will actually be proactive in your plan and in what you want to achieve today and tomorrow.
As one of my specialities is loans for investors, I often get asked whether I am a property investor, too. That’s another key question to ask a mortgage broker if it’s a relevant piece of information for you. That’s because you want to deal with someone who is practising what they’re talking about and is not just a theorist.
You want to know that the people that you’re working with are actually walking the walk as well as talking the talk. It’s that real-life experience that’s really one of the biggest differences between a good and a bad mortgage broker in my opinion.
The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.