A mortgage hunting journey is much more than just looking out for the right interest rates.
It’s much more complicated than you think and that’s why you need an expert to guide you in the process.
Our mortgage brokers have seen a lot and have sometimes gone out of their way to help our customers get approved for their home loans.
Why do you need a mortgage broker?
The honest answer to this is that you don’t.
Did you know the best interests duty doesn’t apply to banks?
Mortgage brokers must always act in your best interests, however, banks are not obligated to do so. Banks can act in their own interests and offer you their best products instead of the product that’s best for you.
Our brokers have a great deal of knowledge on what Australian lenders offer and speak from experience when they suggest you with home loan options.
On top of that, we understand how credit scoring works and help you apply with a lender that’s more likely to interpret your application.
Now that’s out of the way, you’re probably wondering what to ask your mortgage broker?
That’s exactly why we’ve come up with a list of questions that you can ask your broker.
Top 10 questions to ask your mortgage broker when buying a home:
1. How long have you been working as a mortgage broker?
You definitely want someone with ample experience as your mortgage broker, especially if your situation is complex.
You will need to trust the broker for financial decisions. So, it’s always better to have an expert by your side.
A follow-up question would be: are you registered with associations such as the Mortgage & Finance Association of Australia (MFAA) or Finance Brokers Association of Australia (FBAA)?
A membership would be an indication of their expertise and skills.
2. How will you decide which loan options are best suited for me?
Not everyone’s situation will be the same when they apply for a mortgage.
Furthermore, you might be looking for a loan option that has features such as extra repayment, redraw, and offset facilities.
Asking this question will help you get insights into your broker’s thought process on what drives them to recommend you a product.
There could be certain benefits, discounts, or risks involved. Make sure to ask your broker why they have ruled out other lenders.
Our mortgage brokers conduct a preliminary assessment and come up with the best loan options that suit your personal situation.
3. What are the lender options for me?
The more lenders a mortgage broker has on their panel, the more options they have for you!
Don’t hesitate to ask which lenders can help you if your case is special. You can even ask why they recommended a particular lender.
At Home Loan Experts we have over 50 lenders in our panel; each one has their own specialities.
4. What documents do I need to have before applying for a home loan?
Before you proceed with an application, you need to ask your broker what documentation you will need.
The documents you need may vary on a case-to-case basis.
If possible, ask them to provide you with a checklist of documents so you can be well equipped.
Also, don’t forget to ask what steps you could take if you have low documentation.
5. How much deposit will I need to obtain a home loan?
It’s best to get this out of the way beforehand.
Typically, you will need a minimum deposit of 5% of the purchase price. The deposit should be from genuine savings, which usually is regular savings you have contributed over a three month period.
There are lenders that can accept only a 5% deposit and some that don’t even require genuine savings.
You can also borrow more with no deposit by using parents as a guarantor or using a gift as a deposit.
Asking this early will help you prepare a strategic saving plan.
6. How much can I borrow based on my income?
The loan amount you can borrow depends on your income, family size, location, current debts, type of loan, and the lender that you choose.
Make sure to ask your mortgage broker how much you can borrow based on your income.
They will then be able to assess your situation and help you improve your borrowing power.
7. What fees and charges will I incur as part of my mortgage?
Buying a home can be expensive if you take into account several fees and charges that you might incur.
These might include application costs, processing fees, valuation fees, stamp duty surcharges, and Lender’s Mortgage Insurance (LMI).
It’s always best to ask your broker about the fees and charges that you have to pay. And if you could avoid paying any.
You can read more about our fees here.
To clarify, mortgage brokers are paid by lenders so you don’t have to pay them.
8. How long does the mortgage process take?
Generally speaking, the time from submitting your application to reaching the settlement on your property takes between 4-6 weeks.
However, it depends on factors such as the state you live in, the complexity of your application, and how quickly you get approved for the loan.
That is why you should ask your broker how long your home loan process will take as they are well informed of your situation.
9. Should I go for a variable or fixed rate home loan?
“Fixed or variable” is quite a common question among first home buyers.
It’s also a question our mortgage brokers receive on a daily basis.
Mortgage brokers are well aware of the market rates and will advise you according to your requirements.
So, don’t hold back this question as you may need to consider the pros and cons of both.
10. What fees and charges will I incur as part of my mortgage?
Typically, you have to pay for LMI when you borrow over 80% of the property price.
However, Australian lenders also offer waived or no LMI home loans to specific professionals and high-income earners.
Moreover, you can also avoid paying LMI if you have a guarantor for your home loan.
Therefore, it’s best that you ask if you can too qualify for a waived LMI.
If you do, you can save thousands of dollars on your home loan.
Best Tips From Our Brokers
When the cash rate is at a record low, our mortgage brokers suggest you should keep an eye for the interest rates advertised by lenders.
Here are some bonus questions that you can ask your mortgage brokers:
- How can I improve my borrowing power? Brokers usually are aware of how lenders assess your income and can give you some tips to increase the amount you can borrow.
- Are any lenders offering cashback or discounts? Some lenders may offer discounts to ward off competition.
- What rate can you offer? Lenders don’t always advertise their lowest interest rates. Make sure to check with your lender how much interest rate you can get.
- Can I choose to fix my interest rate later? You may want to switch to a fixed rate later depending on your financial situation later on. Ask your broker if your lender will allow you to switch and at what cost.
- Can I make extra repayment during the life of the loan? Whether or not you can make extra repayments depends on the loan you choose. So, make sure to confirm with your broker if your loan comes with a repayment feature.
Talk to a mortgage broker!
You and your mortgage broker need to work together transparently to figure out what’s the best home loan option.
Asking the right questions will put you in front of your situation.
If you’re thinking about getting a home loan, speak with one of our mortgage brokers by calling us on 1300 889 743 or filling in our free online assessment form.