What is a mortgage broker and should I use one?

What You Need to Know About Pepper Home Loan Fees

 

Buying a new home is exciting, but with so many lenders to choose from and so many different types of home loan available, finding the right loan to meet your needs can be tricky. So, you may decide it’s easier to get help from a mortgage broker when looking for the right home loan.

Mortgage brokers are popular with Australians buying a property, with almost 60% of all home loans between October and December 2020 settled by a broker1.

 

What does a mortgage broker do?

Mortgage brokers arrange home loans between lenders, and borrowers – people who are looking for a home loan. They can discuss your home loan needs and goals, find home loan options to suit your situation and assist you with the application process.

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Brokers should take the time to understand your individual situation, work out what you may be able to afford to borrow, provide you with home loan options, discuss how each option will meet your requirements, and let you know much the loan will cost.

Once you’ve decided which home loan suits your needs, the broker can assist you with the application process all the way through to settlement of the loan with the lender.

Note: Mortgage brokers are paid by lenders, so you may not have to pay the broker a fee for their services.

How to choose a mortgage broker

Are they asking enough questions?

Mortgage brokers should ask you a lot of questions about what you want in your home loan as well as about your financial situation. This might include:

  • Your employment history, salary, relationship status, dependents
  • Household income and expenses
  • Your main requirements and objectives (e.g. fixed or variable loan, an offset account, credit card).

Meeting your mortgage broker

Once you’ve decided to meet with a mortgage broker, it helps to make sure that your paperwork is in order before you meet them for the first time – including your financial and employment records.

Consider the ‘must have’ and ‘nice to have’ requirements for your home loan (e.g. do you want to be able to make extra repayments, have branch access). You might also want to think about how long you’d like the loan term.

It’s also a good idea to have a few of your own questions ready to ask the broker.

   
  These questions could include:
   

 
  • Which/how many lenders are on your panel?
  • How do you get paid and does this differ between lenders?
  • Why did you recommend this loan to me?
  • How does each loan option work?
  • What features and options come with each loan option. How do they work and how do they meet my requirements?
  • What are the fees and charges for each loan option?
  • What information will I need to provide for the loan application?
  • Will I need to pay lender’s mortgage insurance?

If you have chosen a suitable home loan option, it is a good idea to ask for the option in writing so you can check the details. And remember, if you don’t like the options provided, you can request other recommendations, or even find another broker.

A home loan is a long-term commitment and likely one of the most important financial decisions of your life. So, you need to be comfortable that you’re choosing the right home loan for your own situation. A mortgage broker could help by talking you through each step, and helping you understand your options, so that you can make a decision.

For more information about Pepper home loans, speak to a Pepper accredited mortgage broker, or you can speak with our Pepper Lending Specialists on 137 377.

 

[1] Mortgage brokers record highest ever December quarter market share, MFAA, 3 March 2021 

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