Even if you have bought and sold property before, or if this is your first venture into the property market, ensure that you get the best from your lending specialist by being prepared. There are a range of products and services on the market, so it is important you find the right company to help with what is going to be the biggest financial commitment for many people.
Once you are armed with the right questions to ask, you can be fully prepared for the meeting with your mortgage broker.
What documents are required for my application?
This is a crucial question because knowing what is required prior to meeting with your lending adviser will give you time to pull the information together. This will help you identify what documents you have to hand in and other relevant information you need to get. This way, you don’t waste precious time during the meeting because you will have everything at your fingertips. The following list of documents are normally the ones required to apply for a loan:
- Pay slips/confirmation of salary from employer
- Bank statements which show your deposit
- Valid passport/form of ID
- Tax returns or notice of assessment
- Information on any existing loans
Your lending specialist will be able to give you information on what they will need to see so ensure you check this out to see what is expected by your mortgage broker.
How do you get paid?
Mortgage brokers get paid in a number of ways. In Australia, brokers are paid on commission from the lenders, which means they are not paid by the customer. Some can also earn money by being paid what is called a trail commission, which is a deferred payment based on the overall balance of the loan. They will get this commission for each month you have the loan from the lender. What you need to establish is that you are getting the best possible loan from your broker to suit your financial needs and not because it gives them the best rate of commission.
Are there any other costs involved in my loan?
You need to find out from the start if there are any “hidden” costs involved in your loan. Ask about additional charges if you wanted to pay off the loan early or if you needed to refinance. Check if they make any administration charges as part of your application so that you know of these costs upfront and can make the decision if their services and loan is going to be the best for your situation. You should also check if Lenders Mortgage Insurance applies to your loan. Typically, this applies if the deposit is less than 20% but it can cost thousands, so make sure you query this with your broker.
Are you licensed to practise?
You need to ensure you are dealing with people who are suitably qualified and also licensed to practise. Anyone who works as a mortgage broker has been required since 1 July 2010 to either become an authorised credit representative of a licensed holder to obtain an Australian Credit Licence. Check out the brokers website or literature for information about their experience in lending and the types of loans they offer. If you require a commercial loan, make sure they have information about this on their webpage and brochures.
What criteria will you use to determine the best loan for me?
You need to understand what the broker is going to be considering in order to provide you with the best possible loan. They should be able to break down the factors they are taking into consideration. You can then review this to see if they are getting the overall picture of your financial status and taking into account your needs and your preferences as well.
When describing what they can offer, also check out the information on their website as well. Is it written clearly and does it give definitions of what the different types of loans with easy to understand information? You are looking to see the features of each loan whether it is a fixed rate loan or variable rate loan so that you can start to plan for how to repay these costs. If they provide you with a loan that is clearly not suitable, then they have not taken all the information you have given them into account.
What else can impact on my borrowing capacity?
You need to be upfront and honest with your broker about your financial situation but even for those with the best credit rating, there may be other areas you have not considered. So, ask if your credit card limit can impact on borrowing capacity. The reason that it could is that there is always the potential for your credit limit to become future debt. If this is something that might apply to you, then ask about the impact your credit limit may have on the application you are submitting.
What is the comparison rate?
The role of the comparison rate is that it should act as a fairer representation of a loan package. If you have looked at advertised rates which appear as though they are a reasonable offer, there could be some associated fees which then makes it less attractive. Ensure you do ask about the different types of interest rates and if it is possible to switch from one to another at any stage.
How many lenders do you work with?
What you are really asking here is about the choice you have on offer. A range of lenders such as the banks and credit unions deal with mortgage brokers on a day-to-day basis. You are not expecting that your preferred broker is going to work with every single one of them, but you would expect them to be able to deal with at least 15 or so organisations.
Remember, a professional mortgage broker will be happy to go through your questions with you so why not contact the experts today!