When you’re shopping online, making the choice that’s right for you and your needs is easy. You can find recommendations and advice absolutely everywhere!
But finding a mortgage broker, even with Google at your fingers? It’s not as easy as finding one with a large Facebook following.
Choice, Australia’s leading consumer advocacy group, understands this dilemma. So they sent 5 pretend homebuyers off to review a few of Australia’s top mortgage brokers. The result of this investigative journalism? It’s not pretty.
- All shadow shoppers noted a complete lack of transparency around commissions. Mortgage broker fees and how mortgage brokers get paid is clouded in mystery, but it shouldn’t be.
- A few of the shadow shoppers felt enough sales pressure to not want to visit their mortgage broker
- There was very little display of interest in the client’s best needs
So how do you spot a good mortgage broker?
I know that you’ve got big plans for a happy, safe and financially secure future. So here are my five top tips for how to choose a mortgage broker that’s right for you – one that has your best interests in mind, and will help you find a suitable home loan.
Find an honest mortgage broker
You’re smart, so you probably have a fairly good BS detector. But if you meet with a mortgage broker, make sure they provide you with a few must-haves: a credit guide that outlines information about the commissions they receive, the lenders they work with, or where to go if you have a dispute with the broker. If they don’t, it’s time to leave their office.
If it’s too good to be true, it probably is
While there are laws to protect consumers, there’s no explicit requirement for brokers to do the ‘best’ thing by you – it’s actually a word that’s off-limits to the mortgage brokers when advertising. That’s because it means different things to different people. To one person, that might mean lower interest rates, and to another, securing the maximum amount you can borrow from a lender. But to you, that might mean an amount that lets you easily make repayments if interest rates rise.
Don’t just rely on a mortgage broker – make sure you know whether you’ll be able to make repayments in the long term and are comfortable with what you’re being offered. A much higher rate and borrowing more than you need is often a sign of a high commission rate – i.e. how your mortgage broker gets paid. Watch out for this – unfortunately it’s more common than you think.
Trust your gut instinct
How do you feel when talking to your mortgage broker? Do you feel valued, heard and comfortable? Or do you feel anxious, irritated and belittled? Are they listening to you, or just selling to you like a late night infomercial? If you’re not sure how you feel, ask yourself this next time you have an appointment: would I rather stay home and do laundry, or go see my mortgage broker?
Big doesn’t always mean best
I’ll let you in on a little industry secret here…Brokers that are with large brokerages are there because they can’t go on their own. Why? Being a self-employed person requires that you take initiative, and fight tooth and nail to get ahead. You aim for excellence, because at the end of the day, it’s your name on the line, not a big employer’s. You can get by as an average broker at a big brokerage and still get paid, but not if you’re out on your own. An independent broker will go above-and-beyond to help their clients, because they’re invested in building a reputation for their business. And that reputation relies on outstanding service.
Look for an educator and advisor, not just a sales rep
A good mortgage broker will give you a crash-course in home loans. They’ll make the world of mortgage lending accessible to you, so that you’re emotionally, financially and technically prepared to buy a house. If you’re not properly schooled in Mortgage Loans 101, you’ll likely run into spots of confusion and heartache down the track. Overall, a good mortgage broker will be invested in a long-term relationship with you. Both you and your broker will benefit: you’ll always have a right-hand man or woman to provide advice, and they’ll enjoy your repeat business.
If you’re looking to buy your first home, it’s paramount that you find someone to help guide and educate you at ever step of the way. Someone who you can trust to be a real human with you, and not just the face of a big mortgage broker.
After all, you deserve that personable experience.
What’s your number one concern with finding a mortgage broker? Answer in the comments below, and I’ll do my best to give you my advice!