There are a number of potential pitfalls in relying on a mortgage broker for the best home loan solution ...
particularly given the enormous growth in the broking industry and the recent entrance of new players.
Getting a broker to arrange your loan can certainly save a lot of time and hassle, but borrowers still have to do their homework to ensure the service they expect is the one that's delivered.
Obtaining genuinely objective recommendations from brokers, confusion over just who's a lender and who's a broker and lender delays in processing applications mean that using a broker is not always the quick and easy solution to home borrowing it may at first appear.
With the proportion of loans arranged through brokers rising from nowhere to around 30 percent in just a few years, the industry has attracted all manner of people and organisations wanting to enter this lucrative commission-based industry.
Time to Refinance?
If you are seeking lower rates, lower fees and more flexibility in your home loan. you are in luck! Our national panel of mortgage brokers is looking forward to an opportunity to assist you. Apply online for a free eligibility assessment and one of our broker network refinance specialists will get on the case to track down the best deal for your individual circumstances. Without any obligation and at no charge to you.
Establishing that any broker you intend to use has experience and qualifications as well as being committed to the industry code of practice is vital to ensure you're getting the best loan for your needs, within a reasonable timeframe.
A number of lenders are also now acting as brokers and some borrowers may be confused over whether they're dealing with an independent broker offering a range of loans, an agent for one lender only, or someone who wears both hats.
Borrowers must establish with any loan representative just what their role is and how they're being paid so they can judge the integrity of loan recommendations being provided.
Once a broker is found and a loan recommended, some lenders have had difficulty coping with the volume of loans coming through the broker channel leading to delays lasting weeks.
This can be a major concern for those home buyers who have little time to arrange loan finance upon purchase.
The 12 things you must know before obtaining your home loan through a broker:
- A broker should have a wide range of home loans from a wide variety of lenders, eg. banks, and non-banks. The wider the choice, the better the chance of finding the loan that suits you best.
- Check the qualifications and experience of your broker, even ask for references from previous borrowers. Are they an MIAA member? Have they completed training courses?
- Ensure your broker is not an agent for one lender in disguise. Some lenders now operate as brokers too so establish with any broker representative exactly what their role is.
- Make sure your broker discloses all commission and payments received so you can judge whether a particular loan recommendation is being influenced by how much the broker will be paid.
- Does the broker charge a fee? Many brokers will not charge borrowers for using their service, others will, so enquire about fees at the outset
- Ask your broker how the loans they offer are researched and rated. Good brokers should be able to clearly outline their criteria
- Ask your broker to provide a formal comparison of any loans recommended including the upfront and ongoing fees and the AAPR (average annual percentage rates). Ensure the AAPR is calculated specifically for the amount you want to borrow.
- Always do some double-checking yourself to satisfy yourself you've been given unbiased and correct information.
- Check what service is offered by the broker after the loan is negotiated. Will the broker be available for subsequent loan enquiries? What happens if there is a dispute between you and the lender?
- Will your broker comply with the Privacy Act to ensure the security of your personal and financial details?
- Your broker should have professional indemnity insurance. This safeguard will help you in the event of legal action.
- As a last resort, the independent Mortgage Industry Ombudsman Scheme (1800 138 422) is available if there is a dispute you can’t resolve with your broker directly.
Need Money for a Bike?
We offer fast, free, easy access to the best Bike Loan rates and options in the Australian market. Simply use our 3-minute Bike Loan enquiry form to see if you qualify … and you'll get instant access to our national Bike Loan broker network … for free advice and assistance through the approval process. No charge, no obligation!
Time for a 2nd opinion on your Home & Contents Insurance?
We now offer a nation-wide panel of specialist Household Insurance brokers ready to help you lock down the best value home and contents insurance solution - tailored to your individual needs and guaranteed to save you money!
Five Worst Credit Card Mistakes
Credit cards can be an excellent way to manage your finances ... they can even be an investment tool. However your credit card can quickly become your enemy if not used correctly. Here are five of the worst mistakes most credit card holders make. If you can avoid these mistakes, you will benefit greatly. - read more
Choosing the Right Bank
Financial institutions are located all around the world. If you are looking to open a bank account, whether that bank account is a transactional account or a savings account, you have a number of banking options. - read more
Default and Reposession
Most people would assume that a default under a loan contract means that payments haven't been made but, as you are about to learn, there are other reasons why a lender may have the right to repossession. - read more
The Truth Behind Payday Loans
There’s a lot been said about payday loans. Many claim that the interest rates charged are outrageous. Others say that they are the only source of finance available for those with less than perfect credit score. There is a bit of truth in both claims but there is much more to payday loans than meets the eyes. - read more
Utilising A Chattel Mortgage for Business Finance
A Chattel Mortgage loan is a simple yet effective finance option designed for business plant and equipment purchases. Here are six rules to consider when arranging finance for your business that will ensure that you retain full control over the loan process and save money in the process. - read more
Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check!
All finance quotes are provided free (via our secure server
) and without obligation.
We respect your
A large loan repayment made in order to clear a debt. Usually applied to a short-term fixed-rate loan, which involves small payments for a certain period of time with one large payment for the remaining amount of the principal at a time specified in the future