The questions all first home buyers should ask mortgage brokers

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Buying a first home can feel like a total whirlwind. Common sense will only get you so far; what it’s really about is understanding your financial position, the market, the buying process and current benefits for first-home buyers specifically.

At what point do you ask yourself, “Should I do it on my own? Rely on the knowledge of family and friends? Or engage a mortgage broker?”

For first home buyers, is it worth getting a mortgage broker, or just working it out yourself?Credit: Dion Georgopoulos

There’s a lot to be across, and if you don’t have time to do all the research yourself, engaging with a broker is a wise idea. So, what can mortgage brokers help people with?

Melbourne-based Max Ivanoff has worked in property finance for more than 15 years, with a passion for educating first-home buyers.

“Brokers can provide valuable guidance and support and help people find the best loan product for their individual needs,” says Ivanoff.

“They can make the home loan process less stressful and more straightforward for borrowers. And save time and money along the way.”

Mortgage brokers can assist people in understanding their borrowing capacity, finding appropriate loans, negotiating with lenders on a buyer’s behalf, streamlining the application process and providing ongoing support.

They might also have access to loan products only available through mortgage brokers.

What should first-home buyers ask a mortgage broker?

Ivanoff says the first thing to understand is the maximum amount you can borrow based on your income, expenses and credit score. That way, you know exactly what properties are within your budget.

Alongside this, you’ll also need to know the minimum deposit needed for the loan. Most lenders require one, however, there are low-deposit and no-deposit home loans available.

Next, it’s onto interest rates. “The interest rate will determine your monthly payment and overall cost of the loan,” he says. “Ask for an estimate of the interest rate on the loan and how it compares to others in the market.”

Fees outside the repayments themselves can be easy to miss. “Mortgage fees and ongoing fees can add up quickly and impact the overall cost of your loan. Ask your broker to explain all the fees associated with the loan, including application fees, valuation fees, settlement fees and ongoing fees.”

It’s also important you know what you’re potentially up for in penalties if you make extra repayments – or want to pay off the loan early. Typically, variable interest rate loans don’t attract any penalties, whereas loans with fixed rates most likely will, Ivanoff says.

Understanding the actual loan application process is useful to avoid any surprises. You can ask a broker to walk you through the process and flag what paperwork you need to prepare, such as payslips, tax returns and bank statements.

The loan aside, it’s imperative first home buyers understand other costs associated with buying a home. Not factoring these in can be the difference between buying a home or not.

This includes stamp duty (alongside any concessions for first-home buyers), legal fees and moving costs.

How do you choose a mortgage broker?

Finding the right broker can be a bit like dating – you’re not going to gel with everyone. It’s about feeling understood and finding someone who can work with you based on your needs and goals.

“First, start by asking for recommendations from family and friends who have recently worked with a mortgage broker,” Ivanoff says. “Personal referrals can be an excellent way to find a reputable and reliable broker.”

“Look for brokers who are licensed and accredited by the Mortgage and Finance Association of Australia (MFAA) or the Finance Brokers Association of Australia (FBAA). These organisations have strict standards for their members, so you can be confident that brokers with these accreditations have the required expertise and knowledge.”

Caterina Hrysomallis is a journalist specialising in culture, lifestyle and health.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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