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Before you go to get your next investment property loan, make sure you ask your broker these 10 simple questions to ensure you're getting the best deal
Blogger: Anton Hamer, Plan Assist Property Team
So you want to shop around but don’t know where to get good Home Loan advice. If you are just starting out, it’s crucial to find an experienced Mortgage Broker, one that will give you solid loan advice. Before you pick up the phone and start ringing, below is a safe list of the Top 10 Questions to ask a Mortgage Broker before you hand over your trust.
1. Is the broker an MFAA Credit Advisor?
An MFAA Member has achieved a set education and experience level, abides by a strict Code of Practice, which is the first step to providing sound advice.
2. Which lenders do the brokers have on their ‘books’?
Some brokers may be able to offer loan products from over 30 different institutions, while others may only consider products from a couple of lenders. The larger and more varied the choice of lenders, the better variety of solutions you will have access to for your project.
3. How does the broker get paid?
Make sure that the broker does not let the size of the commission they will be paid, cloud their judgement. Some lenders pay higher commissions, brokers should not favour these over others. Brokers should disclose all commissions.
4. What types of fees does the broker charge?
Ask the broker to clearly specify what fees and charges you will incur by using their service, and you should check what extra services you are receiving for the extra fee you may be paying. This can range from zero to thousands of dollars depending on the loan proposal.
5. Ask the broker how they compare loans and how do they determine which loan is best for you?
Make sure the broker can provide a clear explanation of the methodology and criteria they use. They should only offer you products which clearly suit your needs.
6. Find out the Loan Comparison (or true) rate of the loans recommended to you.
This rate takes into account the loan interest rate as well as upfront and ongoing fees and charges, to give a better indication of the actual cost of the loan.
7. Ask if the broker is a lender themselves.
You don’t want a broker recommending loans to you if they offer their own loans unless you can be guaranteed that they will always recommend the best loan for your situation and do not lean towards their own.
8. Ask for proof of their professional qualifications and information on their experience, or references from other clients.
All qualified brokers will have certificates confirming their qualifications and professional memberships.
9. Does the broker have professional indemnity insurance?
Make sure they do. This covers them in the event that they are sued for negligence or breach of professional duty.
10. Ask what privacy guidelines they follow when handling your information.
They should comply with the new Privacy Act Credit Reporting provisions and the national Principals for the handling of Personal information.
If you are unsure as to whether or not your broker ticks all of the boxes, ask the right questions to find the right answers and if you are still unsure perhaps shop around.