Questions to ask your mortgage broker or mortgage manager
Getting a home loan is a serious investment of your personal resources and the better prepared you are and what experts you have working with you can make a big difference to getting exactly what you need.
Remember the old saying, being forewarned is being forearmed!
That’s why we have developed these range of questions to ask your mortgage manager or broker.
1. Why should I use a mortgage broker or mortgage manager, like Urban Money?
Urban Money is a Mortgage Manager, this means we offer our own range of home loan as well as other companies lending products through our mortgage broking service.
This gives our customers a real advantage in securing a competitive home loan because we can better tailor our home loans to meet your needs or provide customers with a panel of other lenders from which to choose, including Australia’s largest banks.
2. How long have you been in business and how much experience do you have?
This is a great question as it gives you an idea about the competency of the mortgage manager or broker who will be putting your loan together.
Generally the more experience the mortgage manager or broker has, the better they can package your loan up for submission into the lender and get the subsequent approval.
Home loans can get very complicated, with a number of variables, such as changing employment or being self employed, determining all incomes, including any government allowances as well as knowing lending policy and what is going to fit with the policy and what isn’t.
Experience gives you peace of mind and stops you from wasting your time with people with little or no experience.
3. Do you get paid a commission?
Being paid a commission is how most mortgage managers and brokers earning a living.
It also means customers do not have to pay service fees directly to the mortgage manager or broker.
Most commissions are paid with a portion up front – when the loan settles – and with a portion paid as ‘trail’ for as long as the loan remains with the mortgage broker or manager.
In some cases, some mortgage brokers face losing their customers to the institution the mortgage broker placed their loan with. This poaching does not occur for loans processed directly with a mortgage manager as the mortgage manager is able to retain the relationship with the customer, for the life of the loan.
4. Do you have a credit licence and are you members of the Mortgage Finance Association of Australia (MFAA) or Finance Brokers Association of Australia (FBAA)?
The finance industry is one of the most regulated industries in Australia and is a reason why the Australian banking sector is a world leader. It also means customers are protected and have avenues to access should they have a complaint about their lender or representative.
Memberships and licensing is a way of ensuring standards are kept high and ensures finance practitioners have up-to-date knowledge about the industry, lending policy and the products they offer to market.
5. Do you offer a range of different lenders?
Mortgage brokers do offer a range of different products from a number of different lending institutions, including some of Australia’s largest banks.
In most cases, mortgage managers offer their own range of lending products, as well as as a mortgage broking service. This gives the customer more options when choosing a home loan.
6. How can I access the best rate possible?
Talk openly to your mortgage broker or manager so they can be clear on where you want to be, in 5 years, 10 years and beyond. If they know more about the path you are looking to take they can better tailor a financial solution and plan to get you there faster.
It also helps to keep an eye on the market and also ensure you have everything you need to ensure your home loan can be approved and processed quickly.
7. What is a comparison rate and what fees will I incur when taking out a home loan?
8. How much of a deposit do I need to obtain a loan?
Some lenders will lend up to 100% of the property value. But be very careful, these loans often cost more than a standard home loan.
Generally speaking the bigger your deposit as a percentage of the loan, the better. That’s why we encourage saving from an early age.
9. How do you decide which loan is best suited to my personal situation?
There are a combination of factors that may decide the best loan for your situation.
At Urban Money, as mentioned in question 6, we like to look at where you want to be so we can best select the most appropriate loan for your circumstances. For example the low rate of a basic home loan may not have the loan spit, offset features and ability to make extra repayments you need to better manage your loan over the longer term, and a different type of loan with a slightly higher rate may be more suitable over time.
It really is true, everybody is different, and what may suit one person, may not suit another.
10. Does lending policy differ between lending institutions?
Yes it does. Lenders have different levels of risk when lending to customers and accordingly may have slightly different lending policies to ensure their risk and customer security is limited or eliminated.
Different lending policy may rule in or rule out different home loan products depending on your circumstances.
11. What documents will you need from me to process my loan application?
To ensure your home loan approval can be processed quickly and efficiently it is important to have all your personal information in order before approaching a lender.
12. When it comes to valuing the property, who does this and why?
To eliminate bias, property valuations conducted by the lending institution are determined by a random selection from a predetermined panel of property valuers. Customers nor the lender can choose the property valuer.
13. How long will it take to get my loan approved and settled?
A number of factors may determine how long it takes to get your home loan approved and settled.
As a general rule, if customers can provider the broker or mortgage manager with all the information they need up front, the less time it will take to get approval and to arrange settlement.
Generally speaking, a straight forward home loan could take from 5 – 21 days from the time of application to approval, then a further 1 – 10 days to settlement.
14. What is Lenders Mortgage Insurance (LMI) and when does it kick in?
15. When do I start paying the mortgage back?
Your mortgage repayments will start one month after your date of settlement or at a mutually agreed time within one month of the settlement.
16. How will I make repayments to the loan? Will I need to go into the branch?
This will depend on how you have set up your loan. Most banks and other mortgage managers like us provide online banking so customers can manage their loan from the comfort of their own home.
17. Can I choose to fix my interest rate in at a later stage?
This varies between home loan products. If you are thinking you may like to fix all or a portion of your home loan later down the track, make sure you ask this question before committing to a home loan product.
18. If I choose to take out a fixed interest rate can I choose to lock my fixed interest rate in prior to settlement?
Yes you can. However some lenders may charge a fee for doing so. So you will need to factor this potential cost into the overall cost of your loan.
19. Will you process the First Home Owner’s Grant for me?
Yes. Once you have completed the necessary application, we will process this application as part of your home loan application.
20. If I have a default on my Credit Report will this impact on my ability to obtain a loan?
Defaults come in many forms and can impact on your ability to get a home loan.
Whether you missed a council rates payment through to becoming bankrupt, we all face challenges at some point in our life, and thankfully there are a range of products that can assist people who have recorded a credit default.
Don’t be put off by a credit default, let your broker or mortgage manager know up front and they can put together the best way forward to get you to where you want to be.
These questions will help you get the best result from your mortgage manager or broker. For other handy home loan information, tips and house and home insights visit our blog.