Understanding mortgage can be overwhelming. No matter how financially informed you are about mortgage, the task of finding the ideal and right loan is a daunting one as you negotiate your way through the over 300 loan products currently offered by banks and financial institutions in Malaysia.
A mortgage broker can ease the burden of shopping around and do all the research and legwork to help you uncover and choose the ideal and right loan with minimal hassle. He has access to a range of loan products from his panel of banks and financial institutions and using the information you provide as to your needs and requirements, he will present you with a choice of suitable loan products. Further he does all the running around and paperwork, and they explain how it all works.
However BE CAUTIOUS IN CHOOSING A MORTGAGE BROKER?
The industry is still very new to Malaysia and not regulated by any laws. Mortgage brokers fall outside the ambit of Banking and Financial Institutions Act and the jurisdiction of Bank Negara Malaysia (though banks/financial institutions require BNMís consent before the appointment of any mortgage brokers or agencies to sell their products). In such an environment, there are opportunities for unscrupulous operators to enter the industry. So be vigilant.
8 STEPS TO CHOOSING A MORTGAGE BROKER
- DO YOUR RESEARCH
Do your own research and understand what each mortgage broker has to offer. Surf the net for the information on how long have they been in the industry and the people managing the company. Call the office and ask questions directly. Ask your friends, family and colleagues for recommendations on good mortgage brokers.
- ASK WHO HE REPRESENTS
Ask who are the banks/financial institutions the mortgage broker represents. Most outsourcing agents appointed by banks and financial institutions in Malaysia are authorised to sell the loan products of one bank only and not permitted to sell loan products of other banks and financial institutions. So if an agent claims he can sell loan products of more than one banks or financial institutions, ask him for a letter of appointment from the banks/financial institutions. If an agent only represents one bank/financial institution, then he is not authorized to sell to you loan products of other banks/financial institutions.
- DO NOT SIGN APPLICATION FORMS OF OTHER BANKS
If an agent asks you to sign an application form other than that of the banks/financial institutions that he represents, then you should report such culprit to the banks/financial institutions concerned or Bank Negara Malaysia. Indeed even a bankís mortgage officer does refer the loan applications made to him to another bank without the knowledge of the borrower and his employer.
It is important that you take this precaution as there have been many incidents where confidential financial documents which were handed to unscrupulous agents or even bankís sales officers landed in the wrong hands and ended up with a loan being made to your name without your knowledge. DO NOT HAND OVER any confidential documents until you have sighted satisfactory proof of your agentís appointment by banks/financial institutions.
At the end of the day, a mortgage consultant who sells only loan products of one bank/financial institution does not have the advantages and benefits of a mortgage broker. Click here for the Advantages of Using a Broker
- ASK HOW HE IS PAID
Most agents do not charge the borrowers for their services as they are paid by the banks/financial institutions. Others may charge you a fee. It is also prudent to ask how much each of his panel banks/financial institutions pays him, to determine whether or not he is paid the same commission. Otherwise he would be pushing for the loan package offered by the bank/financial institution who pays him the highest commission. It is best to clarify such matters upfront when you first meet up with your agent.
- ASK IF YOU CAN CHOOSE YOUR OWN SOLICITORS
Some agents receive monies from sources other than the banks/financial institutions that they represent. Ask them if you are free to choose your own solicitors to handle the loan documentation (provided the solicitors are in the panel of the bank/financial institution who grant you the loan). It is common for agents to refer the loan documentation to their own solicitors who will pay a referral fee to the agent.
- ASK IF YOU CAN TAKE UP THE LOAN WITHOUT BUYING ANY INSURANCE
Some agentsí objective of selling a loan product is to sell to you an insurance policy, from which they will receive commission from the insurance company they represent. Ask them if you are free not to take up any insurance coverage for the loan. Make sure your mortgage broker is upfront about the commission and monies they will ultimately receive (from bank/financial institutions, insurance companies and other sources as well as from you, if any) if they are successful.
- ASK HOW HE MAKES A RECOMMENDATION
A good mortgage broker will take time and pain to understand your situation before he makes a recommendation that would suit your needs. A mortgage broker needs to do a full fact finding. He should understand your specific circumstances now and your plans for the future. If he does not take time to listen before he recommends a product, then his recommendation may not be right. If he did, he would be able to justify his recommendation in relation to your needs and requirements.
- PERSONAL JUDGMENT
Admittedly experience alone is not good enough. A good mortgage broker has all necessary market information at hand to provide you with various loan products to meet your needs. He should be able compare the various loan products in the market. Test him on his products knowledge of the available loan packages. Ask him to explain the various features of the loan products recommended and ask him to compare one loan product to another. This is vital to enable you to compare and better understand the interest rates, features, fees and charges, repayment schedules and other matters relating to loan products and to make an informed decision thereafter.
At the end of the day, you have to decide on your own accord whether or not you are comfortable with your agent. After all, his job is of a service nature in giving you financial advice. And since it involves the parting of confidential documents, you have to rely on your own personal judgment to decide if you have confidence in him and trust him.