Home Loans, Property Investment Loans and Refinancing
A mortgage broker or finance broker negotiates with banks, credit unions and other credit providers on your behalf to arrange loans. A mortgage broker typically specialises in home loans, helping to select a loan, manage the whole process right through to settlement.
Mortgage broker for your individual circumstances, as they change it’s important to review your home loan to ensure it meets your needs. In context to home loans changing from time to time, its worthwhile to review what’s available and maybe changing lenders.
How to refinance your home loan? The refinance process begins with a face-to-face interview to better understand your investment needs and objectives with a complete review of all existing loans in the market place to identify products which best suits your goals.
When a lender is chosen, application form is completed and supporting documentation is submitted to lender, next step is for approval to be granted as contracts are prepared and issued to you for signing.
What happens at settlement? Lender pays out existing loan(s) based on your instructions…
Why do some investors choose to refinance?
Most people refinance for one of the following reasons:
- Home renovation
- Better rate than your existing loan provides
- Need cash for investment property
- Save money by offsetting interest earned on money available against interest charged on loan
- Switch from a fixed rate to variable rate or vice versa
- Consolidate debts into a home loan at a cheaper rate to make repayments more affordable
When deciding which mortgage broker to use there are a few questions you want to ask. Is mortgage broker a member of the MFAA?
(MFAA) Mortgage and Finance Association of Australia is the national body which represents Professional Credit Advisers, mortgage, finance brokers, mortgage managers and aggregators.
Membership requirements of MFAA, accredited mortgage consultant (AMC) has achieved certification with experience level and all members are obliged to comply with a strict code of practice. MFAA members must be part of an external dispute resolution service.
How many lenders does a mortgage broker represent on their panel? It is important a mortgage broker has a wide variety of lenders on their panel:
- Credit Unions
- Mortgage Managers
- Non-conforming lenders
Some mortgage brokers represent twenty or thirty different lenders, which means you get a wider choice instead of only a few.
How does the mortgage broker get paid? Brokers are paid a commission on loans which they refer to lenders. Some lenders pay higher level of commissions than others so it’s important to understand how much your mortgage broker is paid.
Mortgage brokers are required to provide a quote and a credit proposal document detailing the amount they are paid as a percentage and as a dollar figure. Professional mortgage brokers are objective and offer a comparison of at least three to five different lenders.
Do mortgage brokers charge a fee? Most mortgage brokers don’t charge a fee as they are paid by lenders to introduce loan as described above, however recent regulation of credit industry means mortgage brokers charge a fee for service as financial planners do.
This involves an upfront fee, which varies from broker to broker, although some brokers do not charge an upfront fee.
How are loans and lenders compared? Under MFAA code of conduct and National Consumer Credit Protection Act, a mortgage broker must only recommend loans, which are “not unsuitable” to the client.
Mortgage brokers typically do an interview to determine needs of the borrower, then use software packages to compare and eliminate unsuitable loans. The broker details differences between shortlisted loans to allow borrower to select preferred product and provider.
Loans are generally compared using a comparison rate as this rate takes into account cost of fees and charges associated with each lender’s product, allowing consumers to quickly and easily compare…apples to apples.
What insurance does the mortgage broker use? MFAA membership requires accredited mortgage consultant professional indemnity insurance. This means in the event a client needs to take legal action, they’re insured.
How is your personal and credit information protected? You need to make sure your mortgage broker understands the importance of maintaining your privacy and ensures your information is held under lock and key.
All reasonable actions must be taken to protect your personal information. These are core to principals of the Privacy Act. Mortgage brokers must abide by Trade Practices Act, ASIC Act, Fair Trading Act and NCCP.