Matching your needs
Mortgage brokers offer a service to borrowers that involves matching your needs with a home loan from a panel of lenders represented by the broker.
The broker will conduct an interview with you to get all the relevant information, both in terms of the financial details of the proposed loan and your lifestyle and risk preferences. They will then use a combination of their own product knowledge and dedicated software to find the loan that is the best match for you.
Once the loan has been settled (that is, when you have your money) the broker is paid a commission by the lender in question. The commission fee is entirely separate from the fees associated with the loan, and generally you will pay the same loan fees regardless of whether you use a broker or get the same loan product direct from a lending institution. After settlement, your broker will normally remain available to you to assist with any changes to the loan you may require in the future, and answer any follow-up questions you may have.
Have your questions ready
A good broker has all the necessary market information at hand to provide you with relevant options detailing the various loan products available. They should also have the capacity to compare all the loans suitable to your particular situation. This is vitally important because it allows you to compare the features, fees, repayment schedules and interest rates of many different loan products at the same time, saving you countless hours of research.
Since brokers can be an invaluable source of information during the borrowing process, make sure you ask lots of questions, especially if you are a novice borrower.
Remember, there’s no such thing as a stupid question. It’s also a good idea to ensure your broker is a member of a professional organisation, such as the Mortgage Industry Association of Australia (MIAA), the Finance Brokers Association of Australia (FBAA) and the Credit Ombudsman Services Limited (COSL). Brokers in NSW and Victoria are required by law to provide you with a Finance Broking Contract which will outline the lenders on their panel, and the commissions they will receive from each of them. If you are using a broker from a state other than NSW or Victoria and are not given a Finance Broking Contract, make sure the broker has access to a wide variety of lending institutions.
Are you getting the best possible deal?
One common misconception is that brokers offer every mortgage product available. Most brokers only offer a range of loans from a select number of lenders. Brokers are paid commissions to sell the loans, so make sure you investigate any potential broker properly. Find out who they are, how much of the home loan marketplace they cover and ask about the commissions they are paid by each of the lenders.
Using a broker is a great way to save time and hassle, but at the end of the day, borrowers need to ensure that they are getting the best deal.