14 Key Questions To Ask Your Mortgage Broker (Don’t Miss Them!)

You’ve finally decided to speak with a mortgage broker to see how they can help you out. But you don’t know what to ask them yet…

In this guide, we’re covering the 14 questions you must ask your mortgage broker in Australia. These are key questions that will help you understand their service better and to make the best use of your mortgage broker.

Let’s get into the questions.

1. Are they licensed?

The first thing you should know is if the mortgage broker is licensed. To be licensed in Australia, they need to be registered with professional bodies such as the Mortgage & Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA).

Ask your mortgage broker if they’re licensed with either of these associations.

You can also verify their license yourself:

1. Go to the Australian Securities & Investments Commission’s (ASIC) Professional Registers Search web page.

2. Enter and search for the name, registration, or license number of your mortgage broker.

3. Verify that their license status is Current.

2. Do they have extensive experience?

Ask for how many customers they have and the number of home loans they’ve processed and closed so far. The bigger the numbers, the better the broker.

It’s also worth looking into the type of mortgage they have the most experience in. Working with a broker with extensive experience in the type of mortgage you’re looking for makes the process a lot smoother.

3. How many lending partners do they have?

Inquire about the number and diversity of the lending partners of your mortgage broker.

Ideally, you should aim to work with a mortgage broker that has a broad panel of lenders. 

For one, this increases the chance of bigger, more credible banks.

Two, it stimulates competitive loans terms for you.

It also means you’ll have better luck finding the mortgage of your choice.

4. Do they have access to exclusive loan products?

Some lenders offer exclusive deals through mortgage brokers that may not be available to consumers directly.

Ask your mortgage broker if they have access to such exclusive loan products. If they do, see if any deal is available at the time of getting your loan so that you can make use of it, if possible.

5. What is their fee structure?

Ask your mortgage broker if they charge any commission or consultation fee from you. 

The fee structure varies depending on the mortgage broker, but there are brokers in Australia that may or may not charge from you.

We’re an online mortgage broker with a panel of 30+ lenders in Australia. Our services come free of charge for our clients, instead, we make a small commission from our lending partners.

That means our broker services are readily available at zero cost to you.

6. What are the borrowing costs involved?

Mortgages come with borrowing costs like applications fees and valuation charges. They are charged by your lender rather than the broker.

But your mortgage broker will know the borrowing costs associated with their lending partners. Ask them what costs need to be considered when getting your loan.

One of the major costs would be the Lender’s Mortgage Insurance (LMI). It’s an insurance policy for your lender when your deposit is below the required threshold (usually 20% in Australia, but may vary by lender), which protects them in case of default in mortgage payments. 

Although it’s for the lender, the hefty premium is paid by you, either fully upfront or added to your mortgage repayments. Keep in mind that adding it to your loan will increase the interest payable.

Here’s a quick example:

If you’re buying a $500,000 home with a 10% deposit, your loan amount would be $450,000.

Because your deposit is below the minimum standard required (20% in this case), the lender will charge LMI. The amount depends on the lender and their insurer.

If you choose to add this LMI cost to your loan rather than paying it upfront, it will accrue interest over the loan term. This means you’ll not only repay the LMI amount but also additional interest on it, making your mortgage even more expensive in the long run.

You can either pay it upfront to avoid that additional interest, or save up the minimum deposit required to avoid LMI altogether.

However, if you can’t afford both the LMI and the deposit required, you can still get the loan without LMI by utilising schemes like:

• LMI waiver for teachers and other professionals.

• Get a guarantor to help you by combining their property or savings with yours as collateral.

• Or try your luck at getting a low or no-deposit mortgage.

7. Are there any loan features available?

If your broker has already curated your loan options, ask them if your options have any extra features available.

Like the redraw facility or offset account.

These features will come in handy if you’re in a position to utilise them.

8. How can I best utilise my loan features?

Got your loan options with extra features available? Ask your broker how you can best utilise them if you don’t already know how.

With the redraw facility, you have the option to withdraw the extra funds you pay into your mortgage.

And an offset account is an everyday transactional account linked to your mortgage, which allows better cash flow.

While they both help you reduce mortgage interest, you can use them wisely to strike the right balance.

Or asking your broker to help you best utilise them will give you a more personalised approach that complements your finances and goals.

9. What’s the interest rate?

The interest rate is a significant element of your mortgage. That’s why you need to ask your broker what interest rates are available for you, and what’s the lowest you can possibly get.

While a low interest rate is always ideal, other borrowing costs should also be considered to ensure you’re getting the best deal. Especially since interest rates and borrowing costs vary by lender.

Higher interest rates will either lift your monthly repayments or extend the loan’s tenure. That ultimately puts you at risk of mortgage stress, which happens when your mortgage repayments go above 30% of your total income.

10. What’s the comparison rate?

The comparison rate helps you understand the true cost of a loan. 

It combines the interest rate with most of the fees and charges associated with the loan, expressed as a single percentage figure.

If your broker gives you various loan options, ask them the comparison rate for each option.

This allows you to compare the different mortgage products more effectively, as it reflects the interest rate as well as the additional costs that can impact the overall expense of the loan over its term.

11. What type of interest rate is right for me?

There are three types of mortgage interest rates: 

• Fixed: A fixed interest rate for a period of time.

• Variable: Interest rate that varies depending on market conditions.

• Split: Divides your loan into multiple parts, with some parts locked in on a fixed interest rate and the rest becomes variable.

If you can’t decide what the best option is for you, consider asking your broker to suggest one based on your finances and goals.

12. What documents are required?

Lenders require you to show a list of documents to process your home loan application.

To make sure you can get everything ready on time, ask your mortgage broker what documents are required by their lending partners.

Typically, you’ll need to show:

• Bank statements.

• Tax returns.

• Assets and liabilities, etc.

However, there may be more documents required based on your finances and the type of home loan you’re looking for. Your broker would be able to give you an idea of all the documents required.

13. What’s the timeline?

Mortgages in Australia usually take 4–6 weeks to go from application to settlement. This depends on the borrower profile, the lender, and the type of loan you apply for.

Ask your mortgage broker how much time it would take for the complete process to see if you’ll get the loan when you need it.

14. Are there any better loan options?

The Australian Securities and Investments Commission (ASIC) mandates all mortgage brokers in Australia to comply with the best interests obligations as set out in the National Consumer Credit Protection Act 2009 (National Credit Act).

This means they are required to act in your best interest and not the lender’s.

So, when your broker curates your home loan options, make sure to reinforce the essence of this rule by asking them if there are any better options available.

This ensures the loan product they recommend you is not influenced by the lender’s commission, helping you benefit from the right mortgage based on your finances and goals.

Conclusion

These are the 14 key questions you can ask your mortgage broker to ensure an honest service that acts in your best interest.

However, you should also consider consulting a licensed financial adviser for specific advice to add an extra layer of legal clarity.

If you’re looking for a mortgage broker that can help you find personalised home loan options, get in touch with us.

Access exclusive loan products from 30+ top lending partners in Australia, with our unbiased support from start to finish.

Even better, our broker services come at zero cost to you. Contact us today to find the right mortgage for you, for free!

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