If you are looking to buy your first home, choosing the right mortgage can seem like a navigating a minefield. Should you go it alone or get a mortgage broker on board to help you?
Using a mortgage broker can save you a multitude of headaches.
Firstly, they can guide you on what you need to get together to support a successful application to the bank.
If you hate paperwork, consider using a broker.
They can take care of all of that for you by managing the application process and then take it through to settlement.
They can also help work out how much you can afford, and by asking you the right questions about your lifestyle and financial goals, they can help you choose the right home loan for you.
When it comes to mortgages, there are so many options to choose from it can make your head spin.
A good mortgage broker will be keeping up to date with all the latest mortgage trends and deals.
Peter White AM is Managing Director of The Finance Brokers Association of Australia (FBAA) and he says a mortgage broker can make all the comparisons for you.
"Using a relevant broker, they have the reach and capacity of multiple lenders, the broker will assess your needs and present you with a range of choices."
The 'best interest obligations'
At the beginning of this year, the Federal Government passed legislation to create a new duty for mortgage brokers to act in the best interests of consumers and where there is a conflict to prioritise consumers' interests when providing credit assistance.
"The broker always acts with their clients' interests first. Unlike the banks, your interests will always come first," says Mr White.
There are around 19,000 mortgage brokers in Australia, so what should you look for when choosing the right one?
Firstly, check the qualifications. Mortgage brokers need to pass multiple courses to start with, and then take refresher courses every two years.
They also need to have a police and credit check, be insured and belong to an industry association such as The Finance Brokers Association of Australia (FBAA).
Brokers are highly-trained professionals who always act with their clients' interest first.Peter White AM, The Finance Brokers Association of Australia
Using a mortgage broker won't cost you a cent.
"The banks pay the broker, so there are no additional costs to the lender," says Mr White.
How mortgage brokers earn their wage is fairly standard: the broker receives a commission from banks for each successful home loan and the commission rates are relatively similar across lenders.
On average, a mortgage broker's commission is 0.15% of the loan balance.
This commission is paid over time, so it's in everyone's best interest to make sure you have a mortgage you can afford for the long haul.
"Brokers have a vested interest in their clients, both financially and morally," says Mr White,
Anyone who is starting to experience mortgage distress due to the coronavirus crisis shouldn't be shy about reaching out for assistance.
"We are lobbying for the stimulus package to be extended beyond September, but at some point it will run out," says Mr White.
"If you need to restructure your mortgage, you need to talk to your broker sooner rather than later."
First time buyers shouldn't be discouraged from jumping onto the property ladder.
"It is a good time for first time buyers if you have secured employment."
"You can take advantage of the stimulus packages for first time buyers, the low-interest rates and a softening in property prices," says Mr White.