10 questions to ask your mortgage broker

As a first home buyer, you’ll want to know as much about your mortgage as possible. Knowing the right questions to ask your mortgage broker is a good start. Their answers will not only give you valuable specific information to aid your homebuying quest but also provide clarity for the broker regarding what exactly it is that you want.

Finding a mortgage broker is relatively easy, but getting the right one for you will not always be so simple. Below are 10 questions you should ask when talking to prospective mortgage brokers and discussing mortgage fees and features.

1. Are you qualified and are you a member of the MFAA and/or the FBAA?

You probably shouldn’t have to ask this question, but there are still plenty of dodgy operators in the sector. So, knowing that your broker has the minimum qualification of a Certificate IV in Finance and Mortgage Broking (FNS40821) should give you some peace of mind.

Additionally, you may want to check that they are members of the Mortgage Finance Association of Australia (MFAA) and/or the Finance Brokers Association of Australia (FBAA). Both of which require their brokers to maintain high standards of service and accountability.

2. What experience do you have?

You’ll then want to know what experience the broker has in the local property market and how long they’ve been operating in it. They should be able to provide you with references or contact details for recent clients or a record of recent sales where they have successfully matched buyers with lenders.

You can also ask them what lenders they work with if you think that will inform your decision to sign up with them. However, it shouldn’t really matter as long as they get you the best possible deal.

3. What’s your process for matching home loans with your clients?

A good broker should be able to assess your borrowing capacity and what you can realistically afford without ending up in mortgage stress and inform you if there are any issues regarding loan eligibility.

They should then be able to match the features you want in your mortgage with those offered by the lenders they work with to find you the best package. This means walking you through your existing finances and recommending improvements where necessary.

» MORE: 7 money management skills to master ASAP

4. What, if any, fees do you charge?

Mortgage brokers usually get paid a commission from the seller’s agent. Still, it’s worth checking that your broker is free before you proceed.

5. What is my borrowing capacity?

Once you’ve settled on a broker, you can start asking them key questions regarding the financials of your prospective mortgage. A good starting point will be to assess your borrowing capacity.

Just be mindful that borrowing capacity doesn’t always coincide with what you can comfortably afford to pay back. A responsible mortgage broker should be able to show you what you can manage in your current situation, not the maximum amount you can borrow.

» MORE: How much can I really borrow for a home loan?

6. How much deposit will I need?

Your mortgage broker can inform you of the deposit amount required and explain lenders mortgage insurance (LMI) if it becomes an issue. As a general rule of thumb, you’ll need a 20% deposit to avoid LMI.

Your broker may be able to find a lender whose requirements aren’t so stringent. They could also recommend ways to get a higher deposit together if required.

7. What fees will I be liable for when I take out a home loan?

Your broker can walk you through the fee structure when buying a property. This includes legal fees or conveyancing, stamp duty and lender-related fees such as a loan establishment fee.

Your broker should also be able to get reductions on bank fees wherever possible given the current amount of competition in the marketplace.

8. Which is the best loan for me in my current situation?

Your broker should be able to give you a rundown on available home loan types and craft a unique product based on your ability to repay the mortgage comfortably. This should include a range of things such as:

your monthly income
any debts you have
assets
the term of the loan
ongoing fees and charges
a fixed or variable interest rate loan
a principal and interest or interest-only loan.

9. What home loan features would you recommend?

Your broker should also be able to recommend home loan features you could benefit from. Depending on your savings and debt profile, these may include:

They should also make you aware of any hidden features in the fine print, such as penalties for paying out the mortgage early.

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10. How can I pay my mortgage off early?

Last but certainly not least your broker should be able to provide you with a plan to pay out the mortgage early, usually through the smart use of a redraw or offset facility. This will hopefully save you untold thousands of dollars

» MORE: How to pay off your mortgage faster

A mortgage broker can be a great asset whether you’re a first-time home buyer, looking for an investment property or considering refinancing your existing mortgage. Good mortgage brokers can obtain the best possible mortgage outcomes for their customers. This is thanks to their ability to access a network of conventional lenders such as banks, non-bank lenders and even private home loan lenders. They are usually paid by the estate agent selling the property, so they also come free of charge to home seekers.

Brokers in the past have been guilty of taking the highest available commissions to the detriment of their clients, but they are now bound by best interest duty. This means they must provide you with the best available information without bias.

» MORE: What is best interests duty?