Like buying a house or a car wasn’t an intimidating task already, the rise in the demand of both these necessities has further added to the complexity.
The house you checked yesterday and were interested in buying the next day, i.e., today, could be the same house someone else intends to buy today. This is what makes it tougher; the more you delay making a purchase, the higher the risk of losing a good home or car. To ease things for yourself, what you can do is consider going for a mortgage instead of taking years to save enough and buy using upfront payment option.
Most people fear the term ‘mortgage’. Those who don’t fear it probably don’t even know about the mortgage options available today and their benefits. It’s okay to not know all the technical details of taking a home or a car loan. After all, that’s what finance brokers in Melbourne or those who are known as reliable car finance brokers in Melbourne are there for.
Just when we named “finance brokers”, a plethora of questions must have suddenly clicked you. Starting from ‘what does financial broker mean’ to questions like ‘where can I find a good mortgage broker in Melbourne or where can I find a reliable mortgage broker’, everyone who hears of mortgage or mortgage brokers in Melbourne drowns into the sea of common worries. This is all thanks to the notoriety and myths that surround the term mortgage! In reality, it is a very safe and beneficial option. In the words of John Paulson:
“If you rent, the rent goes up every year. But if you buy a 30-year mortgage, the cost is fixed.”
To further clear out the air, we have got all your questions covered in this article.
At the outset, mortgage or finance brokers are the experts who suggest suitable options to you from different lenders that are best-suited to your home loan needs. These brokers could be personal loan brokers in Melbourne, car finance brokers, or those that are termed as independent mortgage brokers in Melbourne. However, the key to finding the right type of loan, lender, and property is to choose the right type of broker first.
Part 1: Finding a Mortgage/Finance Broker
1. Obtain recommendations
Your search for a mortgage broker in Melbourne begins with getting recommendations from family, friends, acquaintances, real estate agents, or any other people who have had personal experiences with a broker or different brokers.
There is a likelihood of other homeowners around you to have experienced a similar situation when buying a home or a car. Ask them out and see what they have to say about the finance broker in Melbourne you are considering or about the one they hired. Most real estate agents are also aware of similar scenarios and can connect you to parties who can guide you.
It is advised to ask as many people as you can as they will make your decision more authentic and accurate.
If you are wondering what to ask anyone when looking for recommendations about a finance broker, here are a few important questions:
- Are/were you satisfied with your mortgage broker?
- Do you know of any well-reputed and reliable mortgage brokers?
- Why did you feel the need to use a mortgage broker in Melbourne instead of a lender?
2. Delve into the brokers online
Never should we underestimate the power of research regardless of what you are researching on. The first step discussed in here will give you the names of some mortgage lawyers, and you need to further shortlist them to finally hire one.
Finance brokers in Melbourne have their own portfolios and profiles that help you decide on a broker to hire for yourself. The brokers could be independent mortgage brokers in Melbourne or those that are more established and working in the form of firms. Although the quotes posted online may not be the latest ones, you can still look for what is more important than the price, i.e., overall reputation and reviews.
Look for review business websites that are reliable and other online discussion forums that reveal genuine information.
Once you have a list of shortlisted agents based on both the recommendations and reviews, you need to carry out next-level research to identify if there have been any lawsuits or disciplinary actions against them ever. You can do this by visiting the online registry of The United States’ Nationwide Mortgage Licensing System (NMLS).
3. Disregard uncalled-for ads or commercials
Some brokers and lenders tend to disclose rates that are unreal/fake or don’t really match with the original mortgage market rates. Just as the stock market is fluid, the mortgage markets change on a daily basis and the rates vary too. This is what makes it important to have some suspicion when choosing a finance broker in Melbourne, especially the brokers that are advertised in unsolicited advertisements in any form (digital or print).
Remember, it is you who should be choosing a mortgage broker and not a lender or a broker himself.
Part 2: Interviewing Mortgage Brokers
4. Interview no less than three brokers
The next step after collecting all the referrals, recommendations, and reviews and shortlisting a few mortgage brokers in Melbourne is to schedule interviews with the shortlisted ones. As much as you can, try to schedule in a row (same day or same week). Make a list of questions you need to ask and write down the answers if needed.
Some important questions you should be asking the finance brokers include the 10 questions that are discussed below.
Questions to Ask
– How long have you been in this field/business?
Whether you are hiring a repair company for your home or a mortgage broker in Melbourne, this question is always a good one to start the talk with. The more the experience of a broker, the higher the likelihood of them being knowledgeable.
Lead the brokers to give specific answers that specify a term/period, such as two years or since 1998, than ambiguous answers like “I have years and years of experience.”
· How many loans were written by you during this tenure?
This is the perfect follow-up question after asking about the experience. It will give you a better understanding of the brokers’ experience and knowledge.
Suppose both Broker Y and Z have 5 years of experience, but the former has written 400 loans, while the latter one has written 200. Which one will you go for? The first one, of course!
Likewise, if broker Y and Z have 5 and 3 years of experience and have written 300 and 500 loans respectively, your choice should be Broker Z this time. The number of loans signed clearly says who is more experienced and reliable!
· Who are your clients or what sort of clients are you specialized in?
This question is again very important. The answer will tell you if you are the type of client a particular broker will be able to help. Some will say they are focused on ‘plain vanilla’ clients, while others may be more into sophisticated investors with credit issues.
If Broker A has 100 vanilla loans and 300 bad-credit loans, while Broker B has 500 vanilla loans and 100 bad-credit loans, which one will you go for? You have fully understood the concept if your answer was ‘Broker A’.
Customer Service Standards
· How are you better than other brokers or why should I choose you over others?
Finance and property-related tasks are always challenging and risky, especially when it is about something as sensitive as hiring a finance broker in Melbourne. This is the reason everyone looks for the ‘X-factor’ when choosing a broker as such, i.e., to be safe.
So, before you settle for a broker finally, challenge them with this question.
Again, don’t get carried away with the confident answers. Instead, force them to provide precise ones. “Because I’m reliable” or “Because I provide great service” are a few examples of answers that are unacceptable. Ask them to be more specific or simply cross-question by asking things like “What do you do to be more reliable or to provide greater customer service?”
· How swift are you in responding to the clients’ messages?
Ask this to ensure you will be taken seriously till the deal continues. For example, if there is a problem regarding loan application and you drop a message to clear it out, they should be able to provide prompt and detailed answers.
Look for specific answers, such as “two hours”, instead of those that say “quickly” of “as soon as possible”.
· What do I do if I am not responded in the mentioned time frame?
This is a great follow-up question. The finance brokers in Melbourne should have disciplinary actions or policies defined for this.
Once you get answers to both this and the question before this one, ask them if this could be pinned down in the agreement. Reliable dependent or independent mortgage brokers in Melbourne should not have a problem with this.
Lenders and Loans
· How many lenders do you have on your panel?
This may not come as a surprise to you, but it is important to highlight that mortgage brokers in Melbourne and everywhere else organize loans through different lenders. However, one thing we fail to realize is that each broker works with a variety of lenders and they need accreditation from different institutions they want to work with. A good broker should have 10 to 30 lenders.
· What made you prefer those loans specifically?
A knowledgeable and experienced finance broker will be able to factually (technically) explain this to you using best-suited examples. They should discuss interest rates, rate types, rate structure, loan features, loan fee, and LVR (loan to value ratio) when answering this.
· What are the advantages and disadvantages of each loan?
Ask this question to choose a loan type that is best-suited to your needs. This way, you will be able to make an educated decision.
5. Inquire about the application procedure
A lot of home mortgage brokers and car finance brokers in Melbourne offer an online application option and have online platforms to apply for a loan. Ask about specific things, such as credit score, down payment, closing times, debt to income ratio, etc. Further, solicit information on the documents that will be needed to start with and complete the process.
One thing you need to ensure is to not apply for several mortgage loans, particularly over a specified period of time. This can make the process very confusing and may even result in a bad credit score if the applications are kept pending for over 30 days.
7. Find out the rates, fees, and points
So, how do finance brokers in Melbourne and elsewhere earn? They earn profits from making connections between lenders and homeowners. The profits are generally represented by points and the points are treated as percentages. For example, one point generally implies one percent of your mortgage rate or the commission fee.
While the brokers will almost always announce rates that are best for them, it is not something you should not ask the finance broker that you are considering. This is to ensure the deal is a win-win and not only beneficial for the broker.
Part 3: Finalizing a Mortgage Broker in Melbourne
7. Compare the facts and data you have gathered
Once all is done, the final step before you go on to hire a broker is to compare all the information about each finance broker that you have gathered. Bring together all the application material, notes, figures, and other important data that you have collected and conduct a comparative analysis. If you can’t do it on your own, hire a financial advisor to get accurate results.
Ensure you don’t fall for high-fee, low-rate trick or low-rate-low-fee, and high-risk options.
8. Decide and hire
Now that you have all the information you need along with a detailed analysis, you are all set to finalize your decision. Don’t forget to consider what your intuition says when you are finally making a choice!
The process may seem to be a really lengthy one but shortcuts can make the delays even longer. So, keep calm and start looking for recommendations already!
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