A mortgage broker is such a powerful adviser that, for good or bad, they are likely to have a major influence on your financial life. Here’s some advice from industry experts on five important signs that you have scored a good one.
1. Their credit guide
According to Peter White, CEO of the Finance Brokers Association of Australia (FBAA), the first thing that helps to recognise a good mortgage broker is that they give you their credit guide up-front before talking to you.
“It’s a document that discloses their range of services, their background, what their internal and external dispute resolution processes are, what industry associations they are members of and what ombudsman they are a party to,” he says.
“The credit guide also outlines who their lenders are, and in general terms what their commission structures are. It’s an information document on the person you’re about to talk to, and it’s a legal requirement that it be provided right at the start.”
2. Their memberships
“The second thing is what industry association they belong to,” White says. “Professional bodies like the FBAA do a lot of due diligence on its members including police checks, credit reports and bankruptcy checks.
“We get references from multiple business entities they’re dealing with, make sure their professional indemnities are up to speed, that they’re properly registered and that all the right business modules are in place for them.
“We do all those checks, and we do them annually. We also require them to have 25 hours of professional education and development every year. Now if they don’t belong to an industry body, even though it’s not a legal requirement, quite frankly I’d be concerned about their level of professionalism.”
Real Estate Institute of Australia president, Neville Sanders, says transparency is an imperative characteristic to look for. “I would expect a good mortgage broker would be transparent in their fees,” he says.
“You should be able to understand what fees they charge for various services and what costs will be involved before you engage them, and I’d expect them to explore options from various lenders and demonstrate that they are truly independent.”
Geoff Wood, head of Melbourne home finance company My First Property, makes a similar point. “One of the best signs is that they make you feel comfortable, earn your trust, and give enough information in an open and completely understandable way for you to make a fully informed decision,” he says.
“Personal recommendations are an important indicator of a good broker, and it’s worth asking what percentage of a potential broker’s new clients are referrals.”
4. Are they qualified?
“It’s vital to know they are qualified,” Wood says. “Standards have risen in the past 10 years, and today’s broker must have an Australian Credit Licence or a Credit Representative Licence. Also ensure they belong to an industry association. Apart from the FBAA, there’s also the Mortgage Finance Association of Australia (MFAA).”
5. Mutual understanding
Good brokers make sure they have a deep appreciation of their customer’s needs, circumstances and short- and long-term goals before making any recommendation, Woods says.
“They will also ensure their clients understand the transaction and concepts discussed. For example, clients might say they wish to have a line of credit or an offset account, but not know exactly what they are and how they work.
“They will have access to the latest products from a wide range of banks, credit unions and wholesale funders, clearly articulate timelines in the loan process and follow up after settlement with annual health checks on your loan.”
6. Positive feedback
Melbourne businessman Graham Brierley recently bought his office and warehouse through mortgage broker, Acceptance Finance.
“I went through a broker because I didn’t want the hassle of wading through mounds of paper work myself. I’d used a broker before, when we bought our first home and I liked the way they did all the work for us.
“Buying a commercial property is pretty complicated and you can imagine the amount of paper work involved. The broker walked me through every aspect and did all the running around for me. It saved me a lot of time, which other small business owners would understand.
“Importantly, they selected a mortgage that best suited my circumstances.”
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