When it comes to your mortgage, the best deal is not necessarily the cheapest rate. We asked Phil Naylor, the CEO of the Mortgage and Finance Association of Australia (MFAA), to describe how you can build wealth with the help of a MFAA approved mortgage and finance broker.
RESCU: What are the benefits of using a mortgage broker? How can it save money?
Phil Naylor: “A mortgage broker acts as an intermediary between the borrower and lender who advises the borrower and recommends mortgage loans.
The role of a mortgage and finance broker is two-fold; firstly they take the time to really understand the borrower’s financial situation, and secondly they advise on the breadth and depth of appropriate home loans available on the market.
It’s important to remember the ‘best deal’ is not necessarily the ‘cheapest’ rate. A good mortgage and finance broker will examine your circumstances and future plans to recommend a loan that is right and can help build wealth.
Many products seem to offer a great deal, but they could have penalties, fees and charges you may not be aware of, or they may not offer the flexibility you require in the future. An MFAA mortgage and finance broker can help you avoid taking out a loan you might later regret.”
RESCU: At what stage should I see a mortgage broker?
Phil Naylor: “The best thing to do is consult a mortgage broker in the initial planning stages of purchasing a home.
First time buyers are most likely to use mortgage brokers because they offer a range of value added and personalised services, which should result in a positive and uncomplicated home purchasing experience.
According to the latest MFAA/Bankwest Index (March 2010), the main reasons for choosing mortgage brokers includes; helping consumers undertake all the groundwork, demonstrating expertise in a range of mortgage offerings of various lenders, and presenting a wider loan range.”
RESCU: How do I know if my mortgage broker is any good?
Phil Naylor: “The most important factor is choosing a mortgage / finance broker that belongs to an association which displays the highest levels of professionalism and education – and one that is not afraid to take disciplinary actions to protect consumer interests. The MFAA is Australia’s peak industry body providing services and representation to over 12,500+ professional credit advisers, mortgage and finance brokers.
On June 12, we launched a new consumer awareness campaign to help first time buyers identify accredited mortgage brokers and navigate complex and confusing messages in the mortgage market.”
To help you understand what an approved broker can provide, the MFAA has put together an easy 8-step checklist:
Eight things a mortgage broker should do:
1. Listen to you, ask questions to help them understand your entire financial situation.
2. Tell you about the breadth and depth of home loans available that would suit you as well as the product range of financial institutions.
3. Sign a mortgage/finance broker agreement – this document outlines the scope of work, services provided and fees associated. It should be correctly completed and signed by both parties.
4. Disclose the commission structure. Explain upfront how the broker gets paid for their work.
5. Explain all fees and charges the consumer is likely to incur.
6. Explain the compliance process, outlining who the consumer can complain to and which organisation supervises the broker.
7. Arrange to contact you periodically to review your mortgage and conduct a home loan healthcheck.
8. Explain the privacy policy, ensuring the customer knows how information is used.
For more information on selecting an MFAA approved mortgage and finance broker, visit www.mfaa.com.au
And if you are still looking for your dream house, you should read RESCU’s property expert John McGrath’s blogs for expert advice.