Questions to ask a mortgage broker

LAST year over 90 per cent of mortgage broker customers were satisfied with the service and 32% rated their satisfaction as a nine or 10, a Deloitte market research report found.

Impressive as those results are – what happened to the 10% who were dissatisfied?

Chances are this unlucky group weren’t careful enough when choosing their provider, says Ray White.

To make sure you count yourself amongst the 90%, ask these four questions when choosing your mortgage broker.

How are they paid and who’s on the lending panel?

Knowing how a broker gets paid and by whom is essential to understanding what kind of service they’re going to provide. Most will work purely on commission from banks and lenders, and unfortunately there will be some who choose products for their customers based mainly on the amount of commission they receive.

Make sure you know who’s on their lending panel and why they’ve chosen those institutions.

Ask which lender they use most often and find out why that is.

Before you choose a home loan make sure you know exactly why they’ve chosen the specific product and feel free to ask how much commission they earn from your loan. They’re now legally obliged to tell you.

What accreditations and qualifications do they have?

Before choosing a lender, it will give you peace of mind to know they are fully qualified and accredited with relevant industry bodies.

The following are qualifications and accreditations that your broker should have at minimum:

Registration with the Australian Securities and Investments Commission (ASIC)

An Australian Credit License or be a ‘credit representative’ of an organisation that holds one.

Membership of one more industry body (e.g. Mortgage & Finance Association of Australia).

A Certificate in Financial Services or equivalent qualification.

Membership of the Credit Ombudsman Service or another external dispute scheme.

The last point is particularly important as it means in the event of a dispute you have an external complaints and mediation body to talk to.

Do they have any testimonials?

All the qualifications and accreditations in the world mean zip if your broker doesn’t have any happy customers.

That’s why before committing you should always ask your broker for testimonials – any broker worth their salt will happily oblige.

What are the fees and charges involved?

Many brokers offer their services free of charge and make their money through commission from lenders.

However some will charge a direct fee. It’s essential that you’re 100 per cent clear on what that fee is and if it’s fair given that they’re most likely receiving commission as well.

Remember that if you are dealing with a broker who charges a fee and they find you a suitable loan, you may still have to pay their fee whether you expect it or not.

In the end, however, choosing your mortgage broker is likely to come down to your intuition and your sense of the person.

If you meet a broker and after asking the relevant questions you feel as if they’ve got plenty of integrity and can be trusted, it’s best to go with your gut instinct.

Take a little care when choosing your mortgage broker and you’ll be blown away by how easy and useful the service can be.