Financing done right: selecting the right mortgage broker

Finding the mortgage broker that’s the right fit for you

A mortgage broker acts as the conduit between individuals and banks/lenders and provides expert guidance throughout the mortgage process, so whether you're a seasoned investor or just starting your journey, a broker will be working in your best interests. Sydney-based Mortgage Choice broker, Chantelle Rangel, believes that when it comes to choosing the right broker to partner with, investors should carefully weigh up several factors. She recommends asking four key questions to help you understand if the broker you're talking to is a good fit for what you need.

1. How much experience does your broker have in working with investors?
   • Chantelle says, “Ideally you want to find someone who has helped clients with a range of different investment options and property assets in varied geographical areas,” and suggests doing your research to understand if your broker has a background in a particular area such as purchasing through an SMSF.
2. Can your broker give you an indication of the tax implications and other nuances of investment loans?
   • “While you should always consult your accountant for tax advice, it’s important that the broker understands the basic tax implications associated with investment properties,” says Chantelle.
   • It’s important that the broker you partner with has a solid understanding of depreciation, capital gains, negative gearing, stamp duty and loan structuring. It also helps to have a broker who is across the trends of the current rental market to calculate potential rental yields.
3. Does your broker have access to a wide range of lenders – such as major banks, credit unions and non-bank lenders?
   • “At Mortgage Choice, we often say one lender is an obligation, 35 is a choice,” says Chantelle. She explains that “Brokers with access to a variety of products and rates from a diverse panel of lenders will provide you with more options, allowing you to make the choice that’s right for you and your needs.”
4. Does your broker have contacts who might be helpful for investors to speak with?
   • A well-connected broker can introduce you to experts across various disciplines to support you throughout the investment purchase process. This could include trusted property investment firms, accountants, buyers agents and conveyancers who are well versed in investment strategies to help you take the guesswork out of determining which suppliers you should be dealing with.

Mortgage Choice Broker Chantelle Rangel

Making the most of a broker’s services during the growth phase

Investors who are actively growing their portfolios will want to work with a broker who can provide a range of finance options to support their portfolio growth and suit their risk profile.

“Your broker can also help with cash flow management options – such as optimising loan structures, interest-only loans and offset accounts,” says Chantelle.

Risk management is an important factor during the growth phase, and a broker should be able to help investors understand how to protect their portfolio by assessing loan-to-value ratios, stress testing cash flow scenarios and discussing contingency plans to mitigate risk.

What to ask a broker during the growth phase

“You can start by asking your broker for their insights on the current market. For example, Mortgage Choice brokers have access to property data and analytics from PropTrack, which is also owned by REA Group. These insights help our customers stay across trends and changes in the market, and helps ensure they are making informed decisions,” Chantelle says.

Chantelle explains that brokers often work closely with experts in related fields, such as buyer’s agents, real estate agents, economists, accountants and market analysts, who regularly provide them with valuable industry insights they can pass along to clients.

“You should also ask your broker what finance options will best support your growth ambitions. Most brokers have a varied clientele and can provide insights about the diversification of your portfolio, specific classes of assets and potential geographic locations that will work in a growth phase”.

What some consumers don’t know about mortgage brokers

There are a couple of common misconceptions about mortgage brokers, and one in particular is their source of income.

There may also be a lack of understanding of the large range of options a broker can provide, which create more choice for the consumer.

“Good mortgage brokers will usually have access to a diverse panel of financial providers with varied interest rates, policies and borrowing policies. This gives clients more flexibility to select from a range of options that can be tailored to their unique needs, helping them find the loan that’s right for their unique circumstances.”

Chantelle also notes that mortgage brokers in Australia operate under the ‘Best Interests Duty’, which means they can only recommend loan options that are in the best interest of the customer.

If you are looking for a local expert to help with your investment loan needs, Mortgage Choice has more than 1,000 brokers nationally, with access to market-leading rates from more than35 lenders. Find out more here.