Choosing the right broker
03 December 2014
Brokers have become one of the most popular ways for home buyers to source a home loan. But how do you choose a broker that is right for you? John Oliver shares some tips to get you started.
1. ASK your friends and family for recommendations. Many of your friends and colleagues would have used a broker to source their home loan, so it pays to draw on that knowledge. Find out about their experience and if necessary, meet with the broker to get a feel for whether you can work with them.
2. SHOP around. One of the best ways of assessing your options is to meet with a number of brokers and size up their experience, knowledge and personality. Ask questions about how long they’ve been in the industry, which lenders are on their panel and the types of loans they’re offering. Ask for testimonials from previous clients.
3. LOOK for someone qualified and experienced. When it comes to choosing a broker, experience is essential. It generally gives you the comfort of knowing your broker has been around the block a few times, has built strong relationships with lenders and can source the best loan for your situation. Also check that they have formal qualifications in mortgage broking and are licensed under the National Consumer Credit Protection Act.
4. SEEK out a broker who is attentive to your needs. Soon after meeting a broker, you should be able to establish if they are punctual and well organised. Test the waters and look for signs that they listen, are responsive to your requests and can meet deadlines. It will give you confidence in the relationship and that they will be able to deliver on your expectations.
5. ASSESS their level of knowledge. Look for signs that they are confident discussing different lenders and products with you, without having to continually refer to a computer. If they don’t appear confident in the information they provide, it may be a sign that they are lacking in industry and product knowledge.
6. FIND out who is on their lending panel. Asking them to explain the lenders who are on their panel and who they use most commonly will tell you a lot about them. If they only use a couple of lenders, find out why. If they have a range of reputable lenders on their panel, it will give you confidence that you’re not going to miss a good mortgage deal.
7. UNDERSTAND their fees, charges and commissions. Most brokers won’t charge you for their services, but are paid a commission by the lender. However, it always pays to clarify this upfront to avoid being hit with any direct fees down the track. Brokers are required by law to disclose the commissions paid to them by lenders, so always ask your broker what commissions or benefits they receive. This will help you ensure that their advice isn’t compromised by self-benefit.
8. KEEP it simple. Make sure your broker can explain everything to you in simple terms that you can understand. A home loan is one of the biggest financial commitments you will ever take on, so it’s essential you know what you’re signing up for. If your broker isn’t able to explain everything to you in easy to understand language, they may not be right for you.