Top 10 Questions to Ask Your Mortgage Broker
1. Which type of loan is best?
Acceptable Answer: You want to feel that your mortgage broker has asked you several questions and is genuinely trying to assess your individual needs before providing an answer to this question. The more questions they ask and the more they try to gauge your requirements, the higher the likely that they will match you to a loan that best suits your needs.
2. Who is on your lending panel?
Acceptable Answer: A combination of bank and non bank lenders including building societies etc. Also, if they have more than 20 lenders on their panel you can feel comfortable that you will have options. Note: There is no need to go with the Mortgage Broker that has the biggest lending panel as the individual broker may only be familiar with some of the products from some of the lenders on their panel.
3. What information do I need to have ready for my home loan application?
Acceptable Answer: The Mortgage Broker has a printed checklist of the items you need to gather when applying for a loan and it is written in plain English. You can print your checklist off here.
4. What is the Interest Rate?
Acceptable Answer: Whilst you want to hear a low interest rate, a good Mortgage Broker will take the time to explain what the Comparison Rate is, which provides a more accurate platform to measure more than one loan product against. Sometimes the lowest interest rate can end up costing you more in the long run when you take into consideration all the extra fees.
5. What are the fees on the loan?
Acceptable Answer: A full list of fees explained to you in plain English. Don’t let the Mortgage Broker use a lot of jargon to try and cover up unnecessary charges. Feel free to ask them to explain any fees you don’t understand. You can also enquire if they have a ‘No Fee’ or ‘Low Fee’ home loan.
6. Can I lock in my mortgage interest rate between now and settlement?
Acceptable Answer: Yes. This means that the lender will lock in your interest rate for a period of up to 2 months from the date your home loan is approved. This means that even if mortgage interest rates go up before your loan has settled, your rate won’t change. Most lenders who offer a ‘Rate Lock’ will allow you to reduce your interest rate in line with any decreases in interest rates. You get the best of both worlds. Check that your lender will provide this for free.
7. Is there is a fee to make additional repayments?
Acceptable Answer: No. Ideally, you would like to be able to make additional repayments on your home loan to be able to pay it off sooner and save in interest. This feature has not been available for fixed loans in the past; however there is now a range of fixed rate loans that allow you to make additional repayments. Note: there may be a cap per calendar year on how much extra you can repay on your mortgage.
8. How long will it take for my loan to be approved?
Acceptable Answer: There are 3 levels of approval.
A Pre Approval can be obtained instantly but is not binding and should never to be used to make an offer on a property.
Conditional Approval is where you complete an application form and submit all the supporting documentation to show that you can repay the loan. An assessment is made that you can repay the loan and approval is now only conditional on the property you wish to purchase. Conditional Approval normally takes 2-3 days.
Full Approval is where both you and the property you are purchasing have been approved by the lender. You are now able to formally make an offer on the property or attend an auction. Full Approval normally takes 5-7 days on top of the conditional approval.
Note: Full approval normally requires a valuation to be conducted on the property and if it currently has tenants a notice period must be given to the tenants which can increase the approval time.
9. How long will it take for the loan to settle?
Acceptable Answer: The average time for a refinanced loan to settle is approximately 4 weeks from when full approval is given. For property purchases, the average settlement time is approximately 6 weeks from when contracts are exchanged or the 10% deposit has been paid.
10. Where is the point of no return in accepting a loan?
Acceptable Answer: Once you have spoken with your Broker, confirmed your loan product and submitted your application for approval, you will pay your application fee. If you choose to opt out of your loan application after this stage, your fees may not be refunded. The valuation and legal documentation stages also incur non-refundable fees.