How to Choose a Mortgage Broker

Buying a house can be a daunting task, and for a first time borrower you might not know all the ins and outs that are involved in taking out a home loan. A mortgage broker can help - they are the professionals that match your needs with a home loan from a selection of lenders. But it's important to choose the right broker - one who is knowledgeable, accredited, and covers a wide range of lenders.

Steps

1. Ask friends or colleagues for recommendations. You’ve heard it before; it’s not what you know, but who. Find friends who’ve made property purchases recently and get the details of their mortgage broker.
2. Do your own research via the Internet and telephone. Ask what deals mortgage brokers have on offer and if there are any conditions attached. Remember, this home loan is likely to be part of your life for the next 25 to 30 years so don’t be afraid to ask questions and compare offers.
3. If a mortgage broker offers you a special deal, ask about the special conditions. You know the old saying ‘if it sounds too good to be true, it probably is’. Keep that in mind when assessing deals and weigh up what’s right for you.
4. Internet mortgage brokers should make their offers in writing. Nothing is solid until it’s in black and white. Print out the pages with the offer and keep them filed for reference.
5. Make written notes of all dates, times, names and offers. Keep it all in one folder in case there is a dispute later and you need evidence to back up your claim. Remember, it’s their word against yours, until someone has a record of it!
6. Make sure the mortgage broker belongs to an independent complaints scheme in case anything goes wrong. This ensures you have an avenue to follow for any unforeseen disputes.
7. Check if the mortgage broker has an office. If so, go there to see how busy it is and how professional it appears. Anyone can start a business, but it takes a professional to make it work.
8. Remember, some lenders don’t have branches and only deal through mortgage brokers. Don’t miss out on some good opportunities by ruling out using a mortgage broker.
9. Ask your mortgage broker on what basis they make their recommendations. Mortgage brokers are paid commissions to sell loans, so make sure you ask plenty of questions about the commissions they are paid.
10. Make sure you feel confident about the person who is organizing your mortgage. Go with your gut on this one – if something doesn’t feel right, chances are it isn’t.

Tips

• A good mortgage broker has all the necessary market information at hand to provide you with relevant options detailing the various loan products available. They should also have the capacity to compare all the loans suitable to your particular situation. This is vitally important because it allows you to compare the features, fees, repayment schedules and interest rates of many different loan products at the same time, saving you countless hours of research.
• The mortgage broker will conduct an interview with you to get all the relevant information, both in terms of the financial details of the proposed loan and your lifestyle and risk preferences. They will then use a combination of their own product knowledge and dedicated software to find the home loan that is the best match for you.
• Once the home loan has been settled (that is, when you have your money) the mortgage broker is paid a commission by the home loan lender in question. The commission fee is entirely separate from the fees associated with the home loan, and generally you will pay the same loan fees regardless of whether you use a mortgage broker or get the same loan product direct from a lending institution. After settlement, your mortgage broker will normally remain available to you to assist with any changes to the home loan you may require in the future, and answer any follow-up questions you may have.

Warnings

• There's a number of things to watch out for when considering a home loan. The best thing to do is start reading everything you can so you're familiar with standard terms and what to expect from your mortgage. There's a wealth of information online and many websites now have online mortgage calculators to help you choose the right loan.