Frequently asked questions


What is a mortgage broker?

A Mortgage Broker is an intermediary between the borrower and the lender who uses their knowledge and software to source competitive rates and facilitate a smooth process to settlement. The Mortgage Broker acts in the borrower’s best interests at all times and is their mortgage project manager, handling all the steps in the process and reporting back to the borrower at the various stages.

Why use a mortgage broker?

There are a wide range of mortgage products out there and it can be confusing to try and compare them all. A Mortgage Broker will help navigate through the options by explaining the differences between products and help the borrower choose a loan that suits their specific needs. Once a product is chosen, a Mortgage Broker will make sure things happen on time and the borrower is fully informed every step of the way.

What makes Mortgage Broker Melbourne different?

We have been working in Melbourne and the surrounding suburbs for 20 years and we have been carefully developing our system over that time to make sure our clients get the best possible outcome and service along the way. You only have to read the reviews left by our clients over the years to see why we are the most positively reviewed Mortgage Broker in Melbourne.

Does Mortgage Broker Melbourne charge fees?

We do not charge a fee for our service. We are paid a commission by the lender you choose which is fully disclosed to you at the outset (government and Lender fees and charges apply). Initially, your Mortgage Broker provides you with our Credit Guide, which outlines how we are remunerated generally. When you choose us to arrange your finance, we will provide our Credit Proposal Disclosure document which details the specific sum your lender will pay us after settlement of the loan. Our advice is based on what is best for the borrower and has nothing to do with what we are paid. It is our absolute priority that our clients are happy because we rely purely on their reviews and referrals to sustain our business. That is why we are still going after 20 years and will still be going in another 20!

What happens in my first meeting with Mortgage Broker Melbourne?

Mortgage Broker Melbourne starts by asking you to take 10 or 15 mins to complete our responsible lending questionnaire. Our questionnaire will provide your broker with all the information they need to start working on a plan that is aligned with your needs and objectives.

Your broker will then tee up a time to meet to go through the basics with you and show you some reports which will outline the interest rates and monthly repayments for your proposed mortgage.

In that meeting your broker will outline the differences between various types of home loan products like fixed vs variable rates or basic loans vs fully featured package deals. They will also discuss the pros and cons of smaller lenders vs bigger banks.

Your Melbourne broker will also talk to you about lender rules around different types of properties, such as small inner city units or converted warehouses, large acreage, etc. They will also offer free RP Data property reports on any place you are considering, to give you a valuable insight into that property, including recent comparable sales and an estimate of the value today.

They will also explain in full, the process involved, not just in applying for a mortgage but every single step you will take on your journey. Your Melbourne broker will explain how to make offers, what conditions to place on the contract, how long to set a finance clause or a settlement date.

Your broker will give you our Mortgage Broker Melbourne Handbook which details all the processes, step by step.

Our guide includes an explanation of all the different types of loan products, how to save interest, what is involved in lenders’ mortgage insurance, tips at auctions, and buying and selling. It really is a very informative booklet but your broker remains on hand to manage all these processes for you, of course!

After your first appointment with Mortgage Broker Melbourne you’ll feel glad you chose to engage a mortgage broker! We look forward to helping you buy a property or get a better rate!

Does a Broker just help me get to settlement or do they provide an ongoing service?

Mortgage Broker Melbourne doesn’t forget you after your loan has settled. We are paid an ongoing trailing commission by the lender you chose to continue to be there for you to answer any questions and perform modifications to your loan such as fixing or switching products.

Each year your broker will also review your loan to make sure it still suits your needs. We will also compare it with those on offer from other institutions and negotiate with your current lender for you, to see if we can secure a better rate from them for you.

How much do I need to save for a deposit?

A First Home Buyer needs to save at least a 5% deposit* but, the more that is contributed now, the less interest is charged in the long run and the lower the repayments. If the deposit is less than 20% + the stamp duties, lenders mortgage insurance may apply (explained further down the page). If you are purchasing a subsequent home or refinancing, it is likely you will have more equity so we recommend you put down at least 20% + the costs.

*It is possible, with the help of a Parental Guarantee, to avoid paying lenders mortgage insurance, there is a section on that below also.

What other costs are associated with securing a mortgage?

Mortgage Broker Melbourne charge no fees but you will likely pay Lender and Government fees in the course of arranging and settling your mortgage. In a property purchase, common Government charges are Stamp duty, Land Transfer Registration, Registration and Discharge Registration. You may also pay a loan application fee or lender legal charge, although it is your broker’s role to keep those to a minimum! You will also have to allow for Conveyancing and Coucil Rates / Body Corporate. When refinancing you don’t need a conveyancer and there’s no Stamp Duty or Land Transfer Registration so would only pay Registration and Discharge Registration plus any Lender fees, if applicable.

What is negative gearing?

Mortgage Broker Melbourne recommends seeking the advice of a suitable industry professional when it comes to tax matters but your Mortgage Broker can provide a basic explanation of the elements that pertain specifically to your Investment Property Loan. Basically, Negative Gearing is when the rent does not cover the deductible property outgoings such as mortgage interest, agent fees etc. The loss incurred at the end of the year may be tax deductible, subject to the advice of an accountant.

What is positive gearing?

Positive gearing is simply when the rental income received more than covers all the deductible property expenses. You would have a surplus at the end of the financial year, which may be taxable, once again, subject to the advice of an accountant.

What is a pre-approval?

A pre-approval is confirmation from the lender they are happy with the scenario your broker has prepared and submitted, providing their conditions are met. There may be specific conditions requested but there are some that are standard as follows:

  • A satisfactory valuation result
  • Employment check
  • Formal acceptance from the mortgage insurer (if applicable)

A pre-approval usually lasts for 90 days, at which time your broker will be in touch to renew, if you haven’t made a purchase by that time.

What happens when I buy a property?

When you sign a contract to buy, your broker converts the pre-approval to full approval.

They will collect a copy of the fully signed contract and Section 32 which is then sent on the lender. A valuation is often ordered.

Once the valuation is accepted and all other conditions are met, the lender issues an unconditional approval and a formal loan offer for signing. Another appointment is scheduled so that your broker can fully explain the loan offer, and you can sign it.

Within 3 or 4 days of receipt of the signed loan offer, the lender moves your file to their settlements area who liaises directly with your conveyancer to book a settlement time on the agreed day.

How do I then get to settlement?

Within 3 or 4 days of receipt of the signed loan offer, the lender moves your file to their settlements area who liaises directly with your conveyancer to book a settlement time on the agreed day.

A week or so before settlement, your conveyancer calculates the precise amount of council rates / water rates and lets you know the exact shortfall you need to contribute by way of a bank cheque or transfer from your account. On settlement day the conveyancer liaises with the lender on your behalf and arranges to transfer ownership of the property into your name. All you have to do is collect the keys from the agent!

Do I need a Conveyancer?

We recommend the use of a Conveyancer because they specialise in property, that is all they do so they can fully focus on your property purchase to ensure the process is smooth. The Conveyancer will perform all the necessary property checks and handle the actual settlement for you.

What is a Section 32?

Also called the Vendor’s Statement, the Section 32 contains details about the property such as planning permits, building approvals, title copies, council rates charges and subdivision plans.

*What is the difference between buying by Private Sale and Buying at Auction?

A Private Sale is where you negotiate a price face to face with the agent. Mortgage Broker Melbourne usually recommends an offer subject to finance because the valuer will scrutinise more closely the sale price due to the fact negotiations are normally a closed room deal. In an auction, all the bids are called out in public, at a private sale those bids are sealed so you could end up paying much more than the nearest bidder offered. Subject to finance then gives us time, usually 2 weeks to get a valuer through and have the bank accept that. You can also make a private sale subject to building and or pest inspections.

An Auction can be a more transparent way to buy a property because all interested parties are usually in attendance and the bids are called out in public. The result of an auction is final though, you can’t add conditions to your offer after the hammer has fallen so you need to do your due diligence prior to the auction day. You should obtain a copy of the Section 32 for scrutiny by your conveyancer. If you wish to get a building and or pest inspection, you must do so before auction day because the sale is unconditional, you can’t pull out later because you found a problem with the structure.

If you are the highest bidder but the agent tells you the reserve price has not been met, you will be invited in to negotiate further. Please note you still can’t add conditions to your offer and you need to be careful not to go too much higher than the highest bid because the valuer may think you have overpaid. If you do feel the need to go considerably higher, wait 4 full working days and you can add a subject to finance clause for your protection, in case the valuation comes back lower than the price you paid.

*Legal advice should be sought for your individual circumstances

What is Lenders’ Mortgage Insurance?

Mortgage insurance is usually required when a lender provides a loan that covers more than 80% of the purchase price or valuation, whichever is the lower. It is designed to cover the lender for their risk and protects them in the event that the property needs to be sold. If the lender suffers a loss on the sale, they claim payment from the mortgage insurance company. The insurer then pursues the borrower for the amount they paid the lender. The insurance offers the borrower no protection whatsoever and is a once off charge which can be added to the loan amount in certain circumstances. The price of the premium depends on the loan to value ratio of the property purchased.

Can a guarantor help me avoid Lenders’ Mortgage Insurance?

A parent* is able to help their children avoid the cost of lenders’ mortgage insurance by offering a portion of their home equity to reduce the risk for the lender. The standard comfort zone is where your loan does not exceed 80% of the property value so your deposit is combined with equity in the parent’s home or investment property (your broker will explain how it all works!). *Mum and Dad must seek independent legal advice to have their rights and responsibilities as guarantors explained to them fully.