Mortgage brokers can be an essential service for borrowers, helping to sort through all the different loan options and steering things in the right direction.
It’s important to speak to an accredited broker with an ABN and an Australian Credit Licence who you are comfortable with and who you trust.
Once you’ve selected your broker there are some key questions to ask them to ensure you have the knowledge to get the best outcome on your loan.
1. What type of loan is right for me?
To be able to answer this question for you, your broker will need to be asking you lots of questions about your individual needs and financial situation. A good broker will work out who you are first and will then be able to find the lender that fits you best.
2. How much can I borrow?
Unless you talk to a broker who can find out what your individual circumstances are and what your future goals are, you are most likely not going to get the full picture as to what is possible.
Domain Home Loans’ Marcus Russell told Domain an online calculator is limited in understanding what borrowers’ long-term goals might be.
“You’re not going to get the full extent of your borrowing capacity online,” he said.
“The other part to that, as well, is understanding goals.”
3. What lenders do you have on your panel?
Find out how many lenders are on your broker’s panel so you know how many options are available. The more lenders you have available to you the more possibilities there are to find a loan that perfectly suits your needs and gets the job done for you.
4. Should I take out a variable or fixed interest rate loan?
Ask you broker to give you easy-to-understand information to help you understand the pros and cons of variable and fixed interest rate loans. Also ask them to discuss the possibility of splitting the loan between both types in the chance you can benefit from both of their positive features.
5. Are there any features I should consider?
Home loans often come with additional features that can benefit the borrower. Ask if your loan carries a redraw feature for example, which can allow you to pay back the loan faster.
Other additional loan features that might be able to help you are additional payments, offset accounts, split rate options, interest only terms, repayment schedules, repayment holidays, home loan portability, home loan top ups and a line of credit facility.
6. What fees and charges will I be paying?
Make sure you’re across all the fees and charges you’ll be paying as part of your loan so you aren’t hit with extra costs or hidden charges.
7. Can I move onto fix interest rates down the track?
It’s especially important to ask this question in economic environments like we are currently in where interest rates are on the move. Find out if you can change your interest rate from fixed to variable in future and vice versa, and how you would go about it during the life of your loan.
Mr Russell told Domain it’s best to ask your broker what options you have.
“The biggest thing is to not rush that initial decision if you go variable or if you go in fixed,” he said.
“Ask follow-up questions and get the broker to list all of the pros and cons associated with it.”
