5 Questions To Ask Before You Engage A Mortgage Broker
There are around 17,000 mortgage and finance brokers in Australia, and just because a broker comes recommended by your Uncle’s neighbour’s friend, it doesn’t mean they’re the right one for you. A good finance broker is worth their weight in gold and choosing the wrong one can have significant financial implications.
Perhaps you’ve already done some desktop research and maybe even asked around. Hopefully, you’ve read through a good collection of verified customer reviews and have a good idea about the level of service you can expect from the broker. Now it’s time to get in touch with the brokers on your shortlist to confirm some of the finer details.
Here are our top five questions to ask before engaging a mortgage broker.
1. What’s the most common lending scenario you deal with?
Some brokers might be particularly skilled at helping first home buyers but won’t have a lot of experience in helping secure finance for investment properties. Others might be great at helping self-employed people get finance, but lack expertise in sourcing finance for commercial property. Of course, everyone has to start somewhere, so if the broker doesn’t have a lot of experience in the area you need help with, they may have a good mentor or peer-to-peer support that will help fill any knowledge gaps. It’s up to you to find out.
2. How many lenders did you write loans for in the last 12-months?
While most brokers have at least 25 lenders on their panel, there are many who only send business to a handful of lenders. You want to make sure that the broker you choose scours a wide range of lenders to find you the most suitable loan product, and doesn’t just send you to the lender they’re most comfortable dealing with. Be aware that there are occasionally very valid reasons for brokers writing loans for a small number of lenders, including if they only operate in a specific niche.
3. What other services can you provide me, or connect me to?
Great brokers will have a network of other professionals that they’ll be able to connect you with, which can make the process more seamless for you, including conveyancers, buyer’s advocates or accountants. You should ask them whether they get any ‘kickbacks’ for referring you to other providers. Some mortgage brokers also have financial planning qualifications, and can therefore look at your financial situation more holistically and give more insight into your long-term financial goals.
4. What would be our rules of engagement?
This is all about setting expectations. You might want to know whether the broker is available on weekends or out-of-hours, or how long you can expect to wait before receiving an email reply or return phone call. Perhaps you’re on extremely tight timeframes. Good brokers will be comfortable setting realistic expectations and are famous for their good service, which includes being flexible. Do remember that while the broker works for you, you won’t be their only customer and no matter how diligent and efficient a broker is, they’ll often be at the mercy of the lender, which can impact timeframes. Good communication is critical.
5. What type of professional development have you completed lately?
All accredited mortgage and finance brokers are required to complete 25-30 hours of professional development each year. The quality of this varies, with the industry associations (FBAA and MFAA) awarding points to brokers for anything from attending industry conferences and training events to participating in industry Facebook groups. There’s a push from the industry to adhere to higher professional standards, and this ongoing professional development should play a big part. How important this question is to you will depend on how nuanced and involved your needs are.
- Mortgage and finance brokers are obliged to let you know about any fees upfront. Note that the vast majority won’t charge you to use their service, and get paid from the lender (via their aggregator).
- An accredited mortgage and finance broker will have either a Certificate IV or Diploma-level qualification and be a member of one of the industry associations (CAFBA, FBAA or MFAA).