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Engaging a mortgage broker can make your home loan journey a lot more smooth and efficient. What's more is that mortgage broker services are usually free for borrowers. Here's a snapshot of your home loan journey with a broker.
According to a recent CoreLogic report, mortgage brokers settled about 57% of all residential loans in Australia in the April – June 2020 quarter. What's more is that mortgage brokers usually earn a commission from the lender upon settlement of a home loan, essentially making their services free for most borrowers. If you are looking at engaging with a mortgage broker, here's a quick look at what your home loan journey would look like.
1) Initial contact
During this phase, your broker will want to get a broad idea of financial goals and inform you of the documents you may need. He/she may provide you with a written list of what to bring along.
In the wake of current circumstances, you could connect with your broker in person or virtually. Here's what you can expect at the next phase of your interaction.
- Your broker has an obligation to find out about your needs and objectives before recommending a suitable product, so expect to spend some time going through your financial situation.
- In addition to the details of your income and financial liabilities be prepared to discuss your general living expenses as well.
- Brokers may also seek a privacy consent, which allows them to check your credit record without leaving any specific enquiry on your file. This is important as it helps ensure there are no forgotten financial liabilities which may jeopardise your loan application.
- Depending on your situation's complexity, your broker may be able to provide some recommendations on the spot or may need to carry out some research get back to you with suitable home loan options.
- You will receive home loan recommendations in the form of a Credit Proposal Disclosure Document.
3) Home Loan Choice
Once the recommendation comes back to you, it is time for you to decide. Here are a few things to keep in mind while making a choice.
- Make sure the loan rate and fees, as well as features, are consistent with your requirements.
- One overlooked aspect is the turnaround time associated with your home loan. Ensure that the turnaround time of the home loan option you've selected will fulfil your property settlement time lines.
Once you've made a choice, your broker will handle the paperwork, file your application with the lender and keep you posted on the progress of your application status. Other things to expect here include the following.
- Depending on the lender's requirements, some supporting documentation may need to be updated with newer items, such as payslips. There may also be a need for additional documents.
- In today's environment, where responsible lending is mandatory, back and forth with the lender to scrutinise borrower details is normal. It is your broker's responsibility to control this process. So, leave the conversation with the lender to your broker and provide prompt assistance with any follow-up questions your broker may have.
5) Lender Decision
If everything goes according to plan, your loan will get approved. However, if your loan gets rejected, your broker will help you figure out another option. Here are some key things to consider once you get lender approval.
- It is always a good idea to get a copy of the lender's approval from your broker before you commit to any property purchase.
- There are some additional steps after a formal loan approval before your loan settles. Some examples include signing mortgage and loan documents, arranging insurance, setting up payment options with your lender, and other requirements. Your broker will assist you every step of the way.
6) Loan Settlement
It's best to also engage with a solicitor or conveyancer for smooth settlement with your property seller's legal representative and your lender. Your broker will be involved during this phase, but please note that he/she cannot provide you with legal advice. Cover all bases with professional solicitor and conveyancer services. If you're uncertain of who to reach out to, in most cases, your broker will be able to guide you in the direction of reliable professionals.
7) After Settlement
Your lender will typically provide you with on-line loan access and invite you to set up your account. Your broker may do this via a welcome letter, or even a call. Settlement of your loan is just the start of your mortgage journey. Active management of your loan can help you save thousands of dollars in the long term. Your broker can be instrumental in monitoring your home loan after settlement.
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The information is a compilation from various sources for your benefit and should not be relied upon in lieu of appropriate professional advice.