July 19, 2010
New uniform consumer credit laws governed by ASIC have been introduced to ensure all credit lenders and credit service providers, such as mortgage brokers, engage in responsible lending and transparent customer service.
So, how can potential borrowers decipher the best broker from the rest?
According to Australia's largest independently-owned mortgage broker, Mortgage Choice, using the simple checklist below when choosing a mortgage broker will help ensure borrowers question important aspects of their service and gain a thorough insight into the value of the broker's offering.
Company spokesperson Kristy Sheppard said, "In an increasing competitive mortgage market there is no doubt borrowers achieve the best results - saving time, effort, confusion and, potentially, money - when they shop around for a home loan deal."
"Mortgage brokers are a valuable source of information and assistance, which is why a recent Mortgage Choice survey found 41% of new first homeowners said their mortgage broker was their favoured point of contact for mortgage guidance. In fact, approximately 40% of all new home loans in Australia are now sourced by brokers.
"It can be daunting to figure out how to find one that suits your needs. Do a little homework so you know what sets one mortgage broker and their business apart from others.
"Questions should be asked about their service standards, training, accreditation, range of lenders and products, experience, ethics and commission structure. You should also check if they have their own products and, if so, why they put them forward as suitable."
Mortgage Choice offers the following checklist to help borrowers find a professional mortgage broker.
Is the broker working in your best interests? If so, can they demonstrate they:
- Receive the same commission rate regardless of lender or product chosen?
- Do not have branded products of their own? If so, do they have clear reasons for recommending those products over others?
- Disclose alternative forms of remuneration and any referral fees paid for customer introductions?
- Have looked into your ability to repay the loan amount?
- Have a Customer Charter and Finance Broking Agreement that clearly outlines their service levels, remuneration and dispute resolution policy?
Can the broker clearly explain in writing:
- Why the loan products they suggest are suitable for you and why others are not?
- The process the application will take from enquiry to settlement, including loan processing times?
- Full disclosure of commissions received and how they are calculated?
Can the broker demonstrate professional standards?
- Are they compliant with the National Consumer Credit Protection legislation?
- Have they completed an accredited mortgage broking training course, including qualifications for Certificate IV in Financial Services (Finance and Mortgage Broking)?
- Do they carry adequate professional indemnity insurance?
- Are they a Mortgage & Finance Association of Australia member and do they comply with its Code of Practice?
Can they offer real choice of home loans?
- Do they have access to at least 15 lenders ranging from big banks, smaller banks, building societies, credit unions, etc, on their panel?
- Will you receive a written comparison of loan options including upfront, ongoing and exit fees?
Is the broker's advice and service at no cost to you?
- Outside of the normal home loan application fees, will the broker's service be at no cost to you?
For further information or to arrange an interview, please contact:
(02) 8907 0472