Choosing a Finance Broker

Almost anyone who needs a loan for their home or business will need the services of a finance broker.

Different types of loans have varying features such as interest rates, loan terms, and amortisation periods which present specific advantages for a borrower. Your finance broker will work with you to determine your borrowing needs and ability, select a loan that is best suited to your circumstances and then manage the process until settlement.

* A home loan

* Refinancing an existing loan

* A car loan

* Equipment leasing

* Additional business capitalisation

As loan products become more complex, borrowers nowadays will need a finance broker who understands various loan features and can recommend the right product and lender from a panel of lenders.

* Someone to do the legwork for you

* Access to a wide range of loans (depending on the panel of lenders)

* Experts in loans

* Flexibility

Shopping around for a loan before getting one is important. A broker is generally allowed to offer loan products only of lenders with whom they are accredited, also known as the panel of lenders. This panel of lenders is often made up of large banks, mortgage managers and specialist non-bank lenders. You can ask to view your broker’s panel. If the broker only has a few lenders in their panel, find another one with more lenders and loan products to choose from.

Lenders entice borrowers with a wide array of loan products, each of which has features that are appropriate for specific borrowers. Your broker should be able to compare all the features of various loan products, determine which ones are best for your needs and recommend the right one.

In a residential or home mortgage, the lender pays the broker an upfront commission and a trailing commission on the loans they settle. But in a business or commercial loan, it is possible for the broker to be paid a commission by the borrower in exchange for sourcing their required finance.

Finally, a finance broker usually specialises in specific loans such as residential loans and mortgages, reverse mortgage or equity release, equipment leasing and chattel finance. Inquire about a broker’s specialty first before engaging one for your needs to make sure they have the tools, resources and network to supply what you need.