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16 critical questions you need to ask your mortgage broker

Before you decide on a mortgage broker, make sure you're asking the right questions.

A good mortgage broker can help you navigate the home loan market to find the home loans best suited to your situation. They can take the confusion out of the mortgage process and match you up with the right lenders for your circumstances. But before you sign on the dotted line, there are some important questions to ask your broker, both about their business and the loan you're applying for.

Questions to ask about the broker

1. What credentials do you have?

You will want your mortgage broker to have the relevant mandatory courses completed as well as other additional education to better guide their choices. You'll also want to ensure your broker is registered with the Australian Securities and Investment Commission (ASIC) either as a license holder or a credit representative. You can check ASIC's register here.

2. Are you a member of an industry association?

Mortgage brokers are required to be a member of an industry association, either the Mortgage and Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA). The MFAA and FBAA set standards of practice and discipline for their members.

3. Are you a member of an external dispute resolution (EDR) scheme?

By law, mortgage brokers are required to belong to an EDR scheme, either the Credit and Investments Ombudsman (CIO) or the Financial Ombudsman Service (FOS). An EDR scheme provides consumers an avenue to resolve complaints should problems arise with a broker’s service.

4. How long have you been in the industry?

The length of time that the broker has been in the industry will reflect their experience, so you may want to opt for a broker with more years in the business.

5. Do you charge a fee?

While most mortgage brokers don’t charge their clients, some do, so you should pose the question to the broker at the start so you’re clear about all the costs involved.

6. How many lenders do you have in your network?

As a rule of thumb, most brokers have access to 20-30 lenders. You want to ensure that the broker has a diverse range of lenders in their panel, including banks and non-bank institutions.

7. How much commission do you make?

To understand the broker’s motivation, you should ask how their commission structure works. This may help you determine whether or not there is a conflict of interest at play.

8. Do you have any testimonials?

A successful mortgage broker who has developed positive broker client relationships will be happy to provide you with testimonials from past clients to vouch for their quality of service.

Questions to ask about the loan

1. What is the interest rate?

The answer to this question determines how much you'll repay on top of what you borrow. Interest accrues over the life of the loan, and with the average mortgage lasting 15 years you want to make sure your rate is affordable.

2. Is the rate permanent or just a promotion?

Lenders often give new borrowers an attractive low rate to win their business. This low rate is normally temporary, and sees you revert to the lenders standard rate when the promotional period is over. Find out whether the advertised interest rate is permanent, and if it isn't what's the lenders standard variable rate. There's no point getting a great rate for a year if you're going to pay over the odds for the remaining term.

3. Why have you selected this loan for me over other loans?

By law, mortgage brokers must choose a home loan for you that is "not unsuitable". This means the features, rates and fees should be a good match for your personal circumstances. Make sure you find out how your broker arrived at the decision to suggest a particular home loan for you, including which of your personal circumstances were taken into account.

4. How much of a deposit do I need?

Ask how much of a deposit the lender wants, and find out whether the size of the deposit affects the interest rate of the loan. Sometimes a lender will give you a better rate of interest if you put down a larger deposit. A smaller deposit may also mean that you have to pay a lenders mortgage insurance (LMI) premium.

5. Can I make extra repayments and/or repay my loan early?

The quickest way to repay your mortgage and save money in interest is to make overpayments whenever possible. Double check your lender is happy for you to do this without penalty. Some lenders charge an admin fee to process the additional payment. Whilst you're on the subject of overpayments you should also find out whether your monthly payments adjust in line with any additional payments you make.

6. What are the additional charges?

The most common charges you'll run into when getting a home loan are valuation fees, application fees, and legal fees. It's not unusual for lenders to run special promotions where you get free valuation or help with fees. Ask if there are any additional charges, and find out whether they can be paid upfront or have to be added to your loan.

7. What documents will I need to provide?

Normally lenders need to see 3 - 4 months worth of bank statements, along with a couple of forms of I.D, and proof of your assets and liabilities. Ask whether your lender has any other requirements as this will speed up your application process. Read our home loan checklist for more information

8. How long does it take to process the loan?

In the property market a few days can make a big difference. Try to get an estimate of how long the application process will take, and don't try to settle on a property too early into the process. It's a good idea to get a pre-approval before you go hunting for the home of your dreams.

Mortgage broker comparison

Rates last updated September 20th, 2017
Details Features
Aussie Home Loans
Aussie Home Loans
Aussie is one of Australia's leading financial service providers, having won The Adviser’s Top Mortgage Broker award for the last 3 years. They charge no appointment fees and can meet at a time and place which suits you.
Up to 20 lenders Enquire Now More info
Finsure
Finsure
Finsure has loan offers from over 35 lenders, including major brands, and will work to find a home loan that suits your property needs.
Over 35 lenders Enquire Now More info
eChoice Mortgage Brokers
eChoice Mortgage Brokers
When you do business with eChoice you will be given your own home loan manager to help you select a loan. 25 lenders Enquire Now More info
iConnect
iConnect
iConnect has hundreds of loans available through more than 40 lenders in Australia to choose from to find the home loan that is right for you.
40+ lenders Enquire Now More info
Pepper Money
Pepper Money
Pepper specialises in providing fair home loans to those who are credit impaired - from small defaults all the way up to discharged bankruptcies.
Credit impaired home loans Enquire Now More info

How does a mortgage broker help?

When you deal with a mortgage broker, the answers to these questions should be used in your comparison of loans. Remember, a mortgage broker is there to help you get a home loan!

Marc Terrano

A passionate publisher who loves to tell a story. Learning and teaching personal finance is his main lot at finder.com.au. Talk to him to find out more about home loans.

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4 Responses

  1. Default Gravatar
    beatriceMay 8, 2017

    Hi,
    I am a real estate agent and i wanted to know more about promoting our properties via bank mortgages. how do i go about it? what are the terms?

    • Staff
      LiezlMay 9, 2017Staff

      Hi Beatrice,

      Thank you for your question. Just to confirm though, you have come through finder.com.au, not actually a mortgage broker.

      Unfortunately, finder.com.au can only provide general advice regarding the products we display. It would be best to approach directly your local lenders and mortgage brokers to know their procedure and terms in keeping and promoting third party property portfolio.

      I hope this helps.

      Cheers,
      Liezl

  2. Default Gravatar
    JamesApril 18, 2015

    Are there mortgage brokers that specialize in helping those with bad credit or recent bankruptcy but can arrange for 50% down payment for $400,000
    purchase money mortgage and fully employed in professional job with $100,000 annual salary?

    • Staff
      jodie.humphries@hiveempire.comApril 24, 2015Staff

      Hi James,

      Thank you for getting in touch.
      There are a range of lenders who specialise in assisting borrowers who have been discharged from bankruptcy which you might want to speak to, and we have multiple articles that deal with how you can get a home loan with bad credit or a discharged bankruptcy.

      Regards
      Jodie

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