Not so long ago, the only option for homeowners was to turn to one of the prominent banks in the country to get a mortgage loan. But as things got tougher to get a loan approved, there are many new private lenders who are in the scene offering higher rates but better chances for Australians to fulfill their dream of a house.
In the current scenario, it is easy for someone to get caught up in the web of financial debt if they are not careful about from whom they are lending money. It is challenging to identify what is best for you when there are so many options and promises overwhelming you.
Mortgage brokers, thus play a very important role in connecting the lenders and home buyers. Whether you are taking money from a bank, private or alternative lender, you are better off with a mortgage broker by your side.
So if you have been finding yourself looking to hire one, here are 6 questions to ask them before signing up.
1. About Their License
All mortgage brokers should be licensed with the respective governing bodies to ensure that they meet the specific requirements. This includes education and experience to arrange a mortgage for any purchase.
In Australia, the mortgage building brokers are required to get licensed by the Australian Securities and Investment Commission (ASIC). So before hiring a business broker Brisbane offers, make sure that you deal only with those who are licensed.
2. About Their Experience
Relevant experience is significant when it comes to the job descriptions of mortgage brokers. It is not about how many years they have worked in the field but about how many transactions they have completed successfully.
If a mortgage broker has closed at least five to ten transactions per year, then they could be considered to have solid experience in the field. So ask them about the number of transactions they have completed in the last two years. For part-time brokers, a lower transaction number could also be because of the fewer hours they put into the business.
If you are approaching a team or an individual, ask them about their communication style, their accessibility and promptness to get you a successful deal as well.
3. About The Type of Transactions They Accommodate
As homeowners, you should know what kinds of transactions you can receive and accommodate. You should ask the broker whether they can offer multiple levels of lending. This will make sure that they study your circumstances and offer the right deal that addresses your needs.
If the broker has a track record of working with people with both good and bad credit and has a network with banks, private and alternative lenders you can conclude that they know what they are doing. There are many brokers who work only with banks or private lenders, and they might not be the best option for you.
4. About Their Fee
Mortgage brokers are often paid by the lenders itself. There are also cases where the borrower has to pay the fee. This could range between 1 to 5 per cent or in regulation with the fees set by the governing body. Depending on whether you are borrowing from an alternative lender or a private lender also, the fees could vary.
Few brokers also charge a different or a flat rate than the standard practice. It is best to ask the broker to be upfront about all the fees before you sign an agreement with them.
5. About The Down Payment
Many buyers are not aware that different down payment options allow you to put down less than the standard 20 per cent. Considering the cost to build a house Brisbane, you can pay less depending on the money you are borrowing and based on your agreement with the lender. A mortgage broker should be able to give you an accurate answer regarding the down payment requirements based on your income, credit score and employment history. If you are giving a smaller down payment, that also means that you will have to pay more interest. This is another part that you have to discuss with your broker.
6. About the Interest Rate
The mortgage rates fluctuate on a daily basis. So to get an accurate comparison, you will have to consider many factors. You will also have to get quotes from different lenders on the same date to do a proper comparison of what each one is offering. This is the most beneficial aspect of hiring a mortgage broker who can do a comparison for you from a variety of lenders.
7. About a Bad Credit
One of the most asked questions about lending money is whether it is even possible with a bad credit score, If you have a low credit score, you should be transparent about it with the mortgage broker right from the beginning. This will give them more time to find a suitable one for you and will also increase your chances of getting one, especially if you are a new home builder Brisbane and is doing it for the first time.
If you can put up less than the typical down payment or have a bad credit score, there are also options to take private mortgage insurance. It is not impossible to lend money with a low credit score, it might mean that you will have to pay a high premium on the insurance.
While looking for a mortgage broker, look for someone who offers competitive rates, support and service for you to fulfil your house designs into reality. Their advice is vital for you to choose the right deal for you and to understand the credit report. The right broker might be your key to open many doors of lenders who might not offer you the same deals if you approach them individually.
If you are looking to find the right mortgage broker, TrustCo can help you do that. We also have a complete list of the best Brisbane building companies and individual project builders Brisbane to make your perfect team for your building works.