10 questions to ask your mortgage broker

Part one: experience

How much experience do you have?

This is a good place to start, because a more experienced broker will generally be more knowledgeable than a less experienced broker. Press the broker to give you a specific answer, such as “Five years” or “I’ve been a broker since 2013”, rather than something vague like “I’ve got a lot of experience”.

How many loans have you written during that time?

This is a good follow-up question to ask, as it will give you a better understanding of the mortgage broker’s experience.

For example, imagine two brokers joined the industry in 2013, but Broker A had written 500 loans during that time and Broker B had written 300. In that case, even though both parties would be able to claim five years of industry experience, there would actually be a clear difference in hands-on experience.

What sort of clients do you specialise in?

While most brokers focus on traditional home loan customers, others might focus on, say, self-employed investors or borrowers with poor credit.

Continuing the hypothetical example, Broker A might have facilitated 450 standard loans and 50 self-employed borrower loans, while Broker B might have done 50 vanilla loans and 250 self-employed borrower loans. So if you were a borrower that is self-employed, you may be better off with Broker B.

Part two: customer service 

Why should I choose you rather than another broker?

Organising finance and purchasing property can be complicated and stressful, so you want to know you’re in safe hands. That’s why, before you settle on a particular broker, you should challenge the broker with this particular question. Even if they are a family friend, or have been recommended by close friends.

Don’t let the broker get away with vague statements like “Because I’m the best” or “Because I provide great service”. Use follow-up questions to demand detail. “What specific things make you better than other brokers? What, specifically, do you do to deliver great service?”

How much hand-holding will you do during the buying process?

Taking out a home loan can be a confusing and time consuming process. It can be a lot to juggle on top of, say, your full-time job and managing childcare needs etc.

The reason for this question is so you can discover whether the broker will closely guide you through what is a complicated and stressful process – or expect you to figure it out for yourself. nAfter all, the ‘hand-holding’ is arguably the biggest advantage of using a broker. 

How quickly will you respond to my messages?

If a problem arises during the loan application process, you’ll want your broker to respond quickly – hence this question. Again, demand a specific answer – “Within three hours”, say, rather than “Quickly”.

What happens if you don’t respond to my messages within that time frame?

This is a logical follow-up question that offers you greater insight into the broker’s customer service standards. Again, insist on a specific reply. And once you’ve received answers to the previous questions, ask if the broker would be willing to put both claims in writing. That will indicate how seriously those claims should be taken. 

You do not want to be in a situation where time is of the essence, and you are unable to secure financing, or swiftly respond to a bank or the seller regarding financing. 

Part three: lenders and loans 

How many lenders are on your panel? And who are they?

You probably know that mortgage brokers organise loans through a variety of lenders. But what you might not realise is that different brokers work with different lenders – and that brokers can’t work with a particular institution unless they’ve received accreditation from that institution.

That’s why you want to discover which lenders the broker works with. Brokers generally have between 10 and 30 lenders on their panel; some might have as many as 40. Bear in mind, though, that there are about 150 home loan lenders in Australia, so even brokers with big panels will be accredited with just a minority of lenders.

Why did you choose those particular loans?

The time will come when that broker presents you with several home loan recommendations. Naturally, you should then ask the broker to justify their selection. The broker should then explain why those mortgage loans are best suited to your unique circumstances. 

The explanation might touch on several things:

• Interest rate
• Interest rate type (variable or fixed)
• Interest rate structure (principal and interest or interest-only)
• Loan features (e.g. offset account, redraw facility, extra repayments)
• Loan fees (e.g. upfront fees, monthly fees, discharge fees)
• Loan-to-value ratio (LVR)
• Eligibility for property buyer grants and schemes

What are the pros and cons of each loan?

Now that the broker has presented you with a shortlist of home loans, you’ll need to choose your favourite. First, though, ask the broker to break down the benefits and risks of each loan as it pertains to your specific financial situation. That way, you’ll be making the most informed decision.

Benefits and risks of using a mortgage broker