Choosing the right mortgage broker for you, could be the aerodynamic lift you need to propel your investment strategy in a positive direction.
On the go? Here’s 30 seconds of key take outs:
- Mortgage brokers are not a one-size-fits-all deal. You need to invest some time upfront in interviewing your broker to find an alignment between their expertise and your goals. A good broker is a quality asset that can make a material difference to the strength of your investment strategy.
- Approach your shortlist of mortgage brokers with confidence. You’re in control here. This is about your life, and shaping up your future. By asking the right questions, and listening for the right answers, your next property deal is already in good shape. Be prepared to walk away if the broker you’re interviewing just doesn’t seem to have what you need.
- Once you’ve found your broker, hold them close. They’ll save you time and money, and be the wind under your property investment wings.
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A quality mortgage broker is someone who can offer you a solid source of fundamental knowledge of the finance and lending policies – the framework – that will secure you the right deals to fit your strategy.
If you’re reading my blog articles and check in to the tools, expertise and resources available through Capital Properties regularly, you’re already well on your way to educating yourself on how to find the right property investment deals, and secure the right financing structures to grow your investment portfolio.
So, what could stop you reaching your short, medium and long-term goals? Well, the number of hours in a day looking for the right finance and deals could really zap your property investor momentum.
Remember, you don’t need to do this solo. In fact, I discourage it. You’ll always need a quality team of property investment related experts that can support your strategy. A good mortgage broker will be really good at finding loan solutions that are right for you. They’ll play a key role in your support team and in helping your realise your life goals.
Imagine finding a mortgage broker that really ‘gets you’ and where you’re wanting to head to, and has a dependable track record of finding lending solutions that work best for each of their individual clients? Where could you be in 10 to 15 years from today with that kind of support?
With years of experience in the property investment industry, you’ll come into contact with lenders and mortgage brokers on a regular basis. You’ll end up with hundreds of introductions. That’s not always helpful when you just need one good mortgage broker.
Finding the right mortgage broker for you can feel like trying to spot Wally in the crowd at the World Cup but when you do find them, you don’t let them go.
Ten (10) questions to help you find the right mortgage broker for you
Here are the ten interview questions you need to ask, and then really listen to the answer to, in order to find your mortgage broker.
Tell me about your industry background and experience.
#PropertyInvestorTip: The answer you’re listening out for from a mortgage broker is that they’ve been in the industry for a number of years and ideally also have banking experience.
What type of clients do you mostly work with?
#PropertyInvestorTip: If Mum and Dad owner occupiers are the mortgage broker’s main clients this is not the right mortgage broker for you. Step away right now! Lending and finance policies are significantly different for property investors than owner occupiers.
What are current LVRs for investors, and are any banks capitalising the LMI?
#PropertyInvestorTip: The Loan to Value Ratio (LVR) is simply another way to determine how much of a deposit, or equity, that you’ll need to tip in to make the deal. The LVR is the percentage of the value of the property that you’ll need financed by a lender. For example a 90% LVR of a $400,000 property means you are asking for a $360,000 loan. You’ll need to be able to access and contribute a $40,000 cash deposit, or equity, in this instance.
#PropertyInvestorTip: Lenders Mortgage Insurance (LMI) is insurance that protects the finance lender if you were to default on the loan. Usually a once off LMI premium or fee will be deducted from your loan funds once they’re advanced to you, if you’re considered at risk of default. This often means if you’re borrowing 80% or more. Some lenders will let you capitalise, or add the cost of the LMI premium on top of the amount you’re borrowing. So you still end up paying the insurance premium but you don’t have to have the cash on hand to cover it up-front.
Knowing that I want to build a portfolio of property investments, how would you structure my loans and finance?
#PropertyInvestorTip: If you’re starting out investing in property, it is unlikely that you’ve made plans to stop at just one property. That means you’ll need to look for a mortgage broker that is long sighted and can structure solutions to enable future property purchases. Really solid advice is the answer you’re seeking when you ask this question. Your broker should be able to share tales of examples of helping clients tap into equity in innovative ways, to build portfolios. You don’t want to end up limited to just one property investment because your mortgage broker was short sighted.
Do you order an upfront valuation?
#PropertyInvestorTip: An upfront property valuation is the valuation of the property you wish to purchase before you apply for a loan. Upfront valuations ensure your credit file is not impacted in any way. You want to minimise the number of enquiries on your credit file if you want to optimise your likelihood of having finance approved. A mortgage broker with nous and years of experience can pretty quickly determine whether a deal will be accepted by your lender or not. As a result, your broker may be able to speed up the mortgage application process by having the lender approve your loan immediately.
How long is your loan approval process?
#PropertyInvestorTip: If you’re dedicated to your property investment strategy, early on in the piece particularly, you’ll likely be time poor. Lengthy, drawn out loan approval processes can be really frustrating, create unnecessary stress, eat into your spare-time kitty as well as test your patience. A good mortgage broker will know how to streamline the loan approval process.
What are the fixed rate options right now?
#PropertyInvestorTip: The fixed interest rate can slip below the variable from time to time. A two (2) or three (3) year fixed rate could give you stability over the period. From a budget management perspective, you’ll know exactly what repayments you’re up for each month. It simply makes for easier planning.
How many loans, and to what total value, do your write in one month?
#Property Investor Tip: Yes, this is a cheeky question but the answer will give you an indication of the loan processing time and how efficient your mortgage broker is. The higher the level of volume your broker writes, the higher the broker’s Service Levels ranking. In the finance industry these are recognised as Bronze, Silver and Gold levels. If your broker has a Gold ranking, meaning they’re writing loads of loans, your turnaround times for processing your loan just got quicker!
How do you make your money?
#PropertyInvestorTip: Legally, commissions need to be declared by your broker. Anyone providing a professional service and who does a good job should be amply paid, don’t you think?!
Do you invest in property too?
#PropertyInvestorTip: It’s a massive empathy vote [and win!] when a finance broker is an investor too. With personal experience of the process they’ll see any potential traps before you submit an application. This means they can work with you on overcoming any issues instead of informing you that your application has been declined.
When it comes to your future, approach each of your investment team with confidence. Asking the right questions means you can then make well informed decisions about whose expertise you’ll gather around you so you can kick some goals!