Why you need a good mortgage broker and how to spot a great one

As a property investor, the support of a good team is invaluable – your strategist, accountant and solicitor will each play an important role in helping you to develop your property portfolio. Within the current climate, as Australian banks continue to tighten their lending standards, your mortgage broker will also play a crucial role in your success as an investor. A good mortgage broker will be focused on finding the best possible solutions to suit your long- and short-term goals – and remember, this is not just about finding you the best interest rate – it’s also about helping you to get the best structure for your loan.

HOW CAN A MORTGAGE BROKER HELP YOU?

A mortgage broker works on your behalf, liaising with banks and lenders to find you the right loan product for your needs. Importantly, a mortgage broker will also help you to build the right loan structure for your investment plans or goals. A carefully structured loan can help you to increase the tax effectiveness of your loans, increase your interest savings, target specific timelines for paying off your debt and perhaps most importantly, provide you with the flexibility of offset or draw-down facilities. It’s tempting to seek out the lowest interest rate, however a loan with a seemingly higher interest rate and better structure could easily outperform a loan with a lower rate

A good mortgage broker will make a preliminary assessment of your situation before submitting your loan application and will be able to determine which type of lender might be most appropriate for you. They will have a comprehensive knowledge of products and lending options as well as a strong network of direct relationships with financial institutions, which can translate to faster results than if you were to approach a lender on your own.

HOW DO YOU CHOOSE A GOOD MORTGAGE BROKER?

Mortgage brokers currently write over 50% of all home loans in Australia, making it a multi-billion-dollar industry, with endless newcomers jumping on board. So how can you find an experienced professional who will add genuine value to you as a property investor? Here’s a few key factors to consider:

• Understands your needs

It is important to seek professional help from a person who really understands the mortgage market and takes the time to properly understand your needs, circumstances and goals – both long- and short-term – before making any kind of recommendation to you. Your mortgage broker should be able to answer all your questions and ensure you have a good understanding of all the concepts and terms discussed. A good mortgage broker will often invest much more time and energy to help you through the process than a bank.

• Qualifications

Ensure your mortgage broker has the appropriate qualifications and license – Certificate IV in Financial Services (Finance/Mortgage Broking) as well as membership to the Mortgage & Finance Association (MFAA) or Finance Broker Association of Australia (FBAA).

• Credit Guide

A good mortgage broker will give you their credit guide upfront. This document outlines the broker’s range of services, their background, processes, lenders and general commission structures. This transparency can help you to make a fully informed decision.

• Property investment experience

The primary role of the loan manager is to help you to find the right loan and help you through the application process. However, there is a real advantage in having a mortgage broker who has personal property investment experience as they will likely be able to better determine the appropriate loan structure for you as an investor – taking into consideration payment type (Principal and Interest or Interest Only), loan term or type of rate (variable or fixed).

• Long-term vision

After settlement, your mortgage broker should follow up with you – provide you with an annual ‘health check’ on your loan and touch base in terms of how they can help you with financing your next property investment.

Ultimately, your mortgage broker, much like the rest of your support team, needs to be experienced, inspire confidence and have a solid history of good referrals. If you look beyond who is offering you the lowest interest rate and seek someone who has comprehensive knowledge, ability and experience, this will help you to make the most informed decisions and remain focused on working towards your long-term property investment and financial goals.

If you are planning to buy investment property in Australia and need a good mortgage broker recommendation, we are happy to provide further information if you need – simply contact your strategist – or leave your details with us and we’ll have your local branch get in touch with you directly.