Six questions to ask when choosing a new mortgage broker
When growing a portfolio, it’s important to find the best people to get you the money to buy what you want to buy. Following are key questions to ask when appointing a mortgage broker.
Portfolio success hinges on having strong foundations in both finance and the ability to make deals happen, through engagement of the right people. Building the right finance team will ensure you can keep your investment progress in motion. Following are a few key points to ask a potential mortgage broker or finance expert you are considering adding to your team.
1. Who is your main client base?
How many clients are they dealing with who are in your position? If their main experience is dealing with mums and dads, are they going to be able to get you to the next step towards your goal of 40 properties, rather than stalling at four.
Confidence in your broker is a key to success. If they don’t understand what you’re trying to achieve, stop the meeting there and find someone who does. More factors come into play as your portfolio grows and strategies need to be dealt with correctly. You need a mortgage broker with the experience on board to give you the confidence and ability to progress your portfolio.
2. How long is your pre-approval process?
Timely action on deals that suit your position and goals can be the difference between portfolio growth and stagnation. Having quicker pre-approvals means moving ahead quickly on potential opportunities and accelerating growth.
3. Which banks will you send me to and why?
A lot of brokers get a higher commission for business with a certain bank. It’s important to know who a broker deals with and why they are locked to a particular provider. A good broker should search for the best offer for their client through hard work – not take the easy path with the bank that has the easiest approval process. They must be willing to get the best deal for you.
4. Would you cross-ollaterise my properties?
There are situations where this may occur, and it’s okay, but it’s important to know why cross-collateralisation may need to happen.
5. What are your views on deposits and LMI?
Would the broker suggest a 20% deposit to avoid LMI, or a smaller deposit of 5-10% – and why would they make that decision. A lot of companies may suggest a lower deposit and a more expensive negatively-geared property which may not suit your goals. If mortgage insurance is an option, where will the insurance be actioned? Will it be sent to other companies or will the property be self-insured. Each bank uses a different process and the broker must understand what you can achieve with each company.
6. How soon after settlement can I get a revaluation?
Possibly one of the most important questions for portfolio growth, it’s important to understand how quickly a broker can arrange revaluations to release equity. You need someone who understands when properties are bought below market value in a moving market, how that relates to your goals and who is willing to help you get there through timely revaluations and refinancing. Delays with revaluations can equate to lost opportunities and lost money.
