Navigating the Mortgage Minefield
Should you go it alone or get a finance broker on board to help you?
Using a finance broker can save you a multitude of headaches. Firstly, they can advise you on what you need to get together to support a successful application to the bank.
If you hate paperwork, consider using a broker. They can take care of all of that for you by managing the application process and then take it through to settlement.
They can also help work out how much you can afford, and by asking you the right questions about your lifestyle and financial goals, they can help you choose the right home loan for you.
When it comes to mortgages, there are so many options to choose from it can make your head spin.
A good finance broker will be keeping up to date with all the latest mortgage trends and deals.
The broker always acts with their clients' interests first.
Peter White AM is Managing Director of The Finance Brokers Association of Australia (FBAA) and he said a mortgage broker can make all the comparisons for you.
"Using a finance broker, they have the reach and capacity of multiple lenders, the broker will assess your needs and present you with a range of choices."
At the beginning of 2020, the Federal Government passed legislation to create a new duty for mortgage brokers to act in the best interests of consumers and where there is a conflict to prioritise consumers' interests when providing credit assistance.
"The broker always acts with their clients' interests first. Unlike the banks, your interests will always come first," said Mr White.
There are around 19,000 mortgage brokers in Australia, so what should you look for when choosing the right one?
Firstly, check the qualifications. Finance brokers need to pass multiple courses to start, and then take refresher courses every two years.
They also need to have a police and credit check, be insured and belong to an industry association such as The Finance Brokers Association of Australia (FBAA).
"The banks pay the broker, so there are no additional costs to the lender," said Mr White.
How finance brokers earn their wage is fairly standard: the broker receives a commission from banks for each successful home loan and the commission rates are relatively similar across lenders. On average, a mortgage broker's commission is 0.15 per cent of the loan balance.
This commission is paid over the life of the loan so it's in everyone's best interest to make sure you have a mortgage you can afford for the long haul. "Brokers have a vested interest in their clients, both financially and morally," said Mr White.
First time buyers especially should not be discouraged from jumping onto the property ladder despite an increase in prices in some areas.
"It is a good time for first time buyers if you have secured employment," said Mr White. "You can take advantage of the stimulus packages for first time buyers, along with the low-interest rates."
Your Choice Mortgage Brokers Pty Ltd ATF Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 38643.
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