Home Loan Tools and Resources

Buying a home can be stressful. These tools and resources can give you the information you need to help making planning for your new home simple and stress free.

What is a Mortgage Broker?

A mortgage broker is a person who acts on behalf of a borrower, as an intermediary between the borrower and a lender. They conduct research for the borrower to help choose which lender to apply with, and insulate the borrower from much of the complexity of dealing with the lenders by helping with the paperwork.

Why use a Mortgage Broker?

Taking out a home loan is one of the biggest and most complicated decisions most of us will ever make. A mistake could have significant consequences both for our finances, and for our family life. It just makes sense to get help from someone who is familiar with the system and can help us to avoid the traps and have as smooth and easy an experience as possible.

Mortgage brokers spend a lot of their time talking with representatives of all of the lenders on their Panel, and are kept up to date with changes in lender policy or interest rates. They will also have information on any special offers and discounts that may not yet be public knowledge. A mortgage broker can also sometimes trade off one lender against another to negotiate a special deal for their customers, achieving rate or fee discounts and waivers or other benefits that aren't generally available.

Once you have your home loan in place, a good mortgage broker will keep in touch with you to let you know of any changes in the market place that may benefit you. They can also remind you of any upcoming events, like the expiry of a fixed rate term. Your mortgage broker can effectively take the place of the old fashioned bank manager that helps you keep all your finances in check, and offers advice and assistance at every step of your journey. Many are able to provide additional services like car loans, business finance, self managed super fund lending, equipment leases, general insurance and financial planning services.

How does a Mortgage Broker get paid?

Lenders charge borrowers for the use of the money they have borrowed. That charge comes in the form of "fees" and "interest". These charges are the primary sources of income that a lender uses to run their business, pay their staff, and return a dividend to their shareholders.

When a mortgage broker acts for a borrower to bring a loan application to a particular lender, that lender will pay commissions to the mortgage broker out of the lender's income. This is because the mortgage broker has done the work that would otherwise have been done by the lender's staff. The overall cost to the lender is lower when a mortgage broker does this work, and so they are often more willing to offer discounts to the borrower when the loan is introduced by a mortgage broker.

As the mortgage broker's commissions are fully disclosed to the customer up front, this system is more open and honest than dealing with an employee who would never disclose their wages, bonuses or other incentives.

How do I find a Mortgage Broker?

There are no shortage of mortgage brokers advertising their services, with most locations in Australia having several local options to choose between.

Check that any mortgage broker you are thinking of dealing with has the right qualifications. As a minimum, they must have a Certificate IV in Financial Services, but best practice suggests they also hold a Diploma in Finance and Mortgage Broking Management.

Once the qualifications are confirmed, look for membership of a professional organisation that holds the mortgage broker accountable for their business practices. The peak professional body for mortgage brokers in Australia is the Mortgage and Finance Association of Australia, and another option is the Finance Brokers Association of Australia.

Finally and most importantly, choose a mortgage broker you like and feel comfortable with. If you choose well, your mortgage broker will become someone you have a long term relationship with, like a family doctor. You will need to have confidence in their ability to understand what you want and need, and trust them to hold some of your most sensitive information. It is a good idea to audition your mortgage broker long before you need to arrange a home loan. Make an appointment for coffee, and just get to know them!

Can things still go wrong?

Your mortgage broker is your advocate when dealing with your lending requirements. Usually, they will have seen it all before and have a good idea how to approach most situations that crop up. There can always be "something new", but as people who deal with lending situations all day every day if they don't already have a solution, they will know who to contact for specialised expert advice.

For most people, loan applications are something they may only face two or three times in a lifetime, so it makes good sense to rely on help from someone who knows. But your Broker is only your advocate - the final decision is always yours as the client, and choosing not to follow good advice has led more than one client astray. Choosing different lenders, or changing key objectives after advice has been given can have a huge impact on the outcomes experienced. Some also have taken the Broker's plan and tried to implement it themselves without necessarily understanding all the key issues that need to be managed in the right ways and at the right times. Generally, such situations don't end well.

Finally, life can also intervene. Health, family, work life and circumstances can all have unforeseen impacts that derail our best laid plans. Your Broker can also guide you through ways to manage these situations, and should discuss these options with you at the time you are taking out your loan. Again, they can only offer possibilities for you to consider - the final choice is always yours. But there are a range of different types of cover available for most of the curve balls life can throw at you. If in doubt - ask. It's usually too late if you leave it until after misfortune has struck.

What is the best interest rate I can get?

The best interest rate is a potential trap!

In any competitive market place where customers focus on just one of the factors that effect the price of a product or service, there will be suppliers who take advantage of this by lowering that component of the total cost and raising others. Buying a product on the basis of that one factor alone could lock you into a service that just isn't suitable for you.

A good mortgage broker will be aware of all the factors that make up not only the cost of a loan, but also the various lender policy restrictions that may limit how you deal with your loan. The mortgage broker will guide you to a selection of products that are a good fit for your overall situation, offering both the right range of capabilities, and a good price.

There is an old adage that is just as true for a home loan as it it is for any other product... "The pain of a bad product lingers long after the pleasure of a good price is forgotten."

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Give a mortgage broker at Finance Mt Barker a call on (08) 8210 0050 today!

 

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NAIRNE SA 5252

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Finance Mt Barker Phone Number0412 055 832

 

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NORWOOD SA 5067

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Glen Thornley, Authorised Credit Representative 476052 and Director of GlenHelen Investments Pty Ltd ACN 604 248 348 Authorised Credit Representative 476054 under Australian Associated Advisers Pty Ltd trading as Finance Mt Barker Australian Credit License Number 392169 ACN 084 974 694. Finance Mt Barker is not authorised to carry on business in any country other than Australia. The information contained in this website is directed to and available for Australian residents only.

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