August 22, 2016
FINDING a good mortgage broker can save you a bundle of money on your home loan.
Signing up to a home loan can be a daunting task. Meandering through endless mortgage products to find the best deal possible is a tough call, especially for the uninitiated.
With more than 1800 home loans on the market, according to financial comparison site Canstar, this overwhelming choice means about one in two mortgage customers will engage a broker to help them find a suitable loan.
Most brokers have access to about 90 per cent of products on offer and they usually receive commissions from the credit provider that supplies the loan.
With rates continuing to fall it’s never been a better time to borrow money but with more than 13,000 mortgage brokers operating in Australia how do you go about choosing the one that’s right for you?
WORD OF MOUTH
Mortgage and Finance Association of Australia’s chief executive officer Siobhan Hayden says when you’re on the hunt for a broker, ask around.
“If you’re in the younger demographic and a user of social media, put a message out there and ask people if they’ve used a broker,’’ Hayden says.
“The business for brokers is very much around referral by family or friends.”
TAKE YOUR PICK
Definitely try before you buy.
1300homeloan director John Kolenda says it’s not uncommon for mortgage customers to test the waters and contact multiple brokers before deciding which one to go with.
“Typically a consumer will probably see two to three different people when they’re moving forward on a home loan application,’’ he says.
“They will then make up their mind who they want to go with, but look for a broker who listens to what you are after.
“You need to feel comfortable that you are happy to deal with that broker on your transaction and also in the future.”
Kolenda says also look for a broker who is “responsive, pretty experienced and understands the industry and is across the products in the marketplace.”
CHECK THE BROKER IS LICENSED
The Australian Securities and Investments Commission says Australians should always check the broker or the company they are dealing with is licensed.
Search ASIC Connect’s Professional Registers to ensure your credit provider is legit or phone ASIC’s Infoline on 1300 300 630.
Customers can also use the MFAA website to find an approved credit adviser.
DO YOUR HOMEWORK
Make sure you go to the broker armed with some knowledge of home loans, particularly the interest rates because they vary greatly.
Canstar figures show, on a $300,000 30-year home loan, the average standard variable rate is 5.23 per cent, but there’s a large gap between the lowest SVR at 4.23 per cent and the highest SVR at 6.38 per cent.
On the same loan the average three-year fixed rate is 4.78 per cent but the lowest rate is 4.09 per cent and the highest is 5.59 per cent.
Visit any of the online comparison sites and type in your basic loan details to see what type of deal you can score and ask your broker if they can do better.
Written by Sophie Elsworth, News Corp Australia, new.com.au