What is the role of a mortgage broker ?

Hi guys,

What is the role of a moetgage brpker ?

And how to decide whether the one working with is a good one to go ? i.e. what to look for in one ?

and what ways they could cause any issue ?

Keen to know what are things to know when choosing this and what to be cautious and aware of.

Thank you

 

A mortgage broker will look at your information, and look at the best options available for you. Banks don't all offer the same products, and sometimes have different criteriors. A good MB can find the right product for you based on what you want/need.

There are some MBs that aren't particularly good, however if you choose one that frequents this forum, most are very good and can set you up with something that will work for you now, and in the future.

 

In basic terms they're an impartial intermediary between you and various bank options.

In real terms, they're the best advisors / educators / strategists you'll likely come across, better than most financial advisors. They're in the thick of it on a daily basis and know everything from inside out and aren't constantly hedging and caveating the **** out of every comment they make like financial advisors do.

 

Without a MB, we would not be retired, living off of rents, today.

 

The better question is, what do I need to know to most effectively use a good mortgage broker when I find one?

at least understand loan basics (offsets, redraw, loan splits, fixed and the implications). The broker can educate you but this stuff you can learn by yourself. The broker can concentrate on strategy.

Have a clear idea of your long term plans (you might upgrade ppor, want to buy shares, want to buy multiple properties etc). The answer yes to all is not useful. Think of what the next couple of steps are.

 

Thank you guys for the inputs in terms what a MB does for the buyer.

I think the main concern I have and the thing to which want to know answer is what should I be concerned / cautious about when choosing a MB ?

i.e. is there any way a MB can screw a buyer if they do not choose the right one ?

Thank you

 

I'd love to be a moet grange brpker for a career.

 

Is there any reason why you wouldnt choose one of the brokers on this forum who you like the sound of? Clueless service providers tend to get grilled pretty heavily here. So if they have the runs on the board here........

 

They can inadvertantly screw you by setting you up with a crappy structure - this usually happens when they're focused on the one transaction to hand, and not thinking forward with you to future plans and purchases.

Many (most) mortgage brokers work transactionally like this, so working with someone who specialises in investment lending is key.

 

I can't like this enough.

Mortgage brokers are just every day people doing a job. Most of their customers are going to buying ONE property, or upgrading from one to another. They don't NEED to think outside of the square. In the world that they work in, an investor building a portfolio is not the norm. The brokers on this forum all seem to be quite knowledgeable in what specifically an investor needs/wants. You can tell this from the responses to questions they are asked. So, with this in mind, it's a no brainer for me to use a broker on this forum, as the chance of them stuffing things up inadvertently, is greatly reduced.

 

So this is what I did: I looked up this forum and found the name of brokers that were most often referred to by long time members.

It came to a shortlist of about 6 brokers, so you're spoiled for choice (Jess who just posted here was in that list too). I had no idea which one to go with, so I literally chose one at random. I ended up with Shahin Afarin, and he's a damn powerhouse of a broker. But yeah...that was my process. A bit of research, with a bit of coin tossing. Ha!

EDIT: Also another tip, they don't need to be in the same state as you. You don't really need to meet them in person, although that's really nice it's not mandatory. Don't limit your options based on location.

 

Hi Jaybean,

If you don't meet them in person, how could one be sure who they are sending of their documents to ?

Thank you

 

Thank you guys for the replies !

Suppose it is only for PPOR that you are looking for and not a portfolio, does the above about the structure still apply ?

 

Good question. Here's my experience:

1) My original broker was a family friend when I live in Brisbane so I met him a lot, so when I moved interstate I obviously still had that connection. He did all my subsequent deals remotely.

2) I was fortunate enough to be living in Sydney at the time I rolled the dice on Shahin so we met at a cafe. That was the first and only time we've met so it's never mattered where he or I were located going forward.

So in terms of going in purely blind I don't know, I hope one of the MB's on this forum can chime in on this.

I would say if they have a good reputation here then they're likely to be solid though. I mean you don't post on here for 5-10 years and build up a reputation then **** it away to mess about with one little guy (sorry to insinuate you're a little guy, I assume you're not about to go buy $10m worth of property?).

 

YES. I made the same mistake and thought...well geez, when am I going to buy #2, much less another 10?

Things change. Don't kneecap yourself like I did. 10 years from now you won't be the same person with the same financial position with the same goals.

Maybe it won't even be investment related - say your kid turns out to be a genius and you need to suddenly come up with 300k to pay for Harvard. The right structure isn't necessarily even about investing, it's bigger than that. That's why when you meet a MB they will ask you what your goals are. It's not just small talk like "oh what did you do on your weekend?" sort of small talk, it's a serious question. Don't be shy, don't hold back, don't beat around the bush. If you have some insane notion of retiring at 27, or buying a gold plated ham sandwich, say it. The clearer your goals are the better they can guide you. What you tell them really matters. Your goals can / will change, but it at least gives them something tangible to work with.

 

All of finance (including mortgage broking) is highly regulated in Australia with a very strict licensing regime. At a minimum you can look up a brokers or bankers Australian Credit License details on the ASIC portal to verify that they are actually licensed to do their job. If they're not appropriately licensed, there are very significant criminal penalties involved.

Brokers are bound by the same privacy laws as the lenders and will have privacy statements that effectively say they'll only share your information and documents with the lender or parties relevant to assisting you with your finance requirements.

Furthermore, effective from January, legislation has been passed that requires mortgage brokers to act in the clients best interests at all times. Whilst 'best interests' can be fairly subjective and the industry is still trying to figure out what this means, it only applies to mortgage brokers. What this really means...

* Mortgage brokers must put your interests ahead of everything else.
* Bankers, branch staff, mobile bankers, etc, have no obligation to put your interests first.


A couple of other interesting facts (which can easily be independently verified):

* Approximately 60% of residential loans in Australia are organised through mortgage brokers. This figure has steadily increased over the last 20 years.

* Last financial year, the financial services ombudsman AFCA received 7,378 complaints in relation to home loans with only 40 complaints lodged against mortgage brokers. Brokers account of only 0.5% of all home loan related complaints, compared to 83.0% of complaints being lodged against lenders. I don't know how many complaints were actually upheld, but in the previous year it was less than a quarter of complaints made against brokers were found to be valid.


You might ask why should you use a broker. The real question is why wouldn't you?

 

This. And I should also add Peter was in my shortlist too lol. A lot of very talented people here...as I said, you're spoiled for choice.

 

This

I'm in Sydney. My Broker is in Qld.

 

Thank you for the replies guys !

When discussing about structure above, what structure is it exactly ? Is it like the business structure like a Trust or something or is it like the features of the loan, like interest rate and offset account and other such features ?

 

Thank you Peter Tersteeg !

Where could I get more information or a brief summary of the complints that you have mentioned. This for the MB but also for others like lenders and PM, agent etc. So that I could learn more about what to look for in this when planning for this.