A Strategic Approach to Your Next Move
By: Smile Elite
May 08, 2024

Whether you are stepping into the market for the first time, seeking a lifestyle upgrade, or exploring investment opportunities, securing your financing early with pre-approval is a smart move. Not only does it strengthen your position to negotiate effectively, but it also gives you the confidence to act swiftly when your dream property appears and it comes time to say YES!

Navigating Finance - Why Engaging with a Mortgage Broker Can Make Sense

The landscape of home financing is ever-changing. Engaging with a knowledgeable finance broker can ensure you receive competitive rates and suitable options tailored to your needs. A recent Real Estate Institute of Australia (REIA) report highlighted that the average household is now allocating just under 48 per cent of their income on mortgage repayments.

With the economy cooling and inflation slowing, some economists are optimistic that the next move by the RBA will likely be a rate cut, potentially in September. So, you may even be looking at options to downsize or refinance. 

With economic shifts influencing market conditions, staying informed through a broker can be incredibly beneficial.

The Value of Mortgage Brokers

When it comes to organising your finance,  using a mortgage broker can make good sense. Mortgage brokers are specialists who deal with home loans daily. They serve as your advocate in the financial world, helping to match you with a loan that fits your specific requirements. Having valuable information on the best offers available will allow you to make an informed decision that suits your requirements.

Here is what a broker does for you:

Acts as a Liaison: Brokers facilitate the conversation between you and potential lenders, handling the nuances of the application process until approval.

Saves Time and Stress: Instead of navigating the complex market alone and feeling overwhelmed, a broker can sift through various offerings, helping you find the right fit.

Personalised Options: Being well-versed and up-to-date in the products available, Mortgage Brokers can offer loans and rates that may not be directly accessible through traditional banks.

Ensuring Your Broker’s Credibility

Always ensure a broker has a license to give you credit (loan) advice before meeting. Look for a broker who holds an Australian Credit Licence or Credit Representative status, as required by the Australian Securities and Investments Commission (ASIC). Membership in a professional body like the Mortgage and Finance Association of Australia (MFAA) also indicates a commitment to maintaining industry standards.

Key Questions to Ask Your Broker

When meeting with a broker, consider the following to ensure you make the most informed decision:

· Which lenders do you work with?

· How is your payment structured, and does it vary between lenders?

· What are the key requirements for my loan application?

· Why is this loan the best option for my situation?

· What are the total fees associated with this loan?

· Can you explain the loan features and how they could benefit me?

· Could you provide a few more loan options, including the most cost-effective choice?

· What is the threshold for lender's mortgage insurance (LMI) - how can I avoid it?

Before You Commit

Gather Insights: Seek recommendations and reviews from friends or family who have previously worked with brokers. Alternatively, ask the broker for client testimonials.

Do Your Homework: Research loans independently to better understand your options and prepare to challenge your broker with informed questions.

Review the Agreement: Ensure all details are clearly outlined in any agreement, including loan type, terms, rates, fees, and any additional costs.

If unsure, ask more questions. 

Take your time: Taking the time to thoroughly understand your options and the implications of your choices ensures you remain in control of your financial decisions—take your time to reflect on the information and options presented. Never sign blank forms or leave details for the broker to fill in later or feel pressured into signing. Ask for more time to make a considered decision.

Acknowledgements: Realestate.com.au, Moneysmart.gov.au, REIA, Mortgage Choice, AFG, Home Loan Experts, Mortgage House, Troy Green, David Taylor ABC News