Mortgage Brokers

Buying a house is a complicated, stressful, and confusing process, so it’s no wonder why many Australians turn to mortgage brokers for help. Unfortunately, not everyone is clear on what exactly mortgage brokers can offer. Getting the facts on Aussie mortgage brokers is the first step in finding out whether their services are right for you.

What is a mortgage broker and how do they work?

A mortgage broker, sometimes known as a mortgage advisor, is a financial expert specializing in home loans. Their goal is to help balance your desires with your budget and find you the best option possible. They will also walk you through the home buying process and help take care of the loan application and settlement procedures.

How much does a mortgage broker cost?

Brokers usually work on a commission basis, meaning that they have to get you an approved loan before they get paid. Some brokers may also charge fees for additional advising services, such as financial planning, but home loans are still their bread and butter. There are two main types of commission that a mortgage advisor receives.

Upfront commission
The broker gets a one-time payout of around 0.3-0.6% of the loan’s starting value in return for introducing you to the lender.
Trail commission
The broker gets a monthly payment of around 0.1-0.2% of the outstanding loan value in return for ongoing advisory services.

What are the pros and cons of a mortgage broker?

A mortgage broker can be a major asset. People who could benefit from a mortgage broker include inexperienced first time home buyers, borrowers with complex financial situations, or borrowers with bad credit. A mortgage advisor can also provide advice that is specific to your local market. For instance, mortgage brokers in Melbourne have different specialized market knowledge from a mortgage broker in Perth or a mortgage broker in Sydney.

At the same time, broker services aren’t free, and there are a few other limitations to know before you hire a mortgage broker. These are the biggest pros and cons you should keep in mind.

Benefits of mortgage brokers

The broker can thoroughly explain the financial aspects of buying a home, taking into account your individual circumstances.
The broker will perform the bulk of the home loan research for you, and they are very knowledgeable about market trends.
The broker assembles a range of options that they have picked specifically for you, and you can compare the choices easily.

Drawbacks of mortgage brokers

The broker might not give you the full landscape of the loans available, since they are aligned with a limited list of lenders.
The broker’s educational qualifications and industry experience are not always a guarantee, so they may not be a true expert
The broker still requires a substantial amount of your time throughout the process, and you have to pay for the service.

How do I find the best mortgage broker?

When you hire a mortgage broker, you are trusting them with one of the biggest purchases of your lifetime. Do your due diligence and make sure you are getting the best mortgage broker by following these simple tricks.

Check accreditation and qualifications: Find out if the broker has earned their licenses and certifications from relevant professional organizations.
Read online reviews: Just like you would for any other service provider that you hire, see what past customers have said about their experiences.
Ask for recommendations: Chances are that you know someone who’s bought a house recently, so you can ask if they had a broker they liked.
Approach several brokers: Don’t just search “mortgage broker near me” and go with the first one—shop around to see who will be the best fit.

What should I ask a mortgage broker before hiring them?

Looking for a mortgage broker is almost like interviewing someone for a job: you are hiring them to perform an important and expensive service. These are some useful questions to ask in order to get a feel for a potential candidate.

How long have you been in this industry? You want someone with sufficient experience to know what they’re doing. Membership with the Mortgage and Finance Association of Australia or the Finance Brokers Association of Australia is a positive sign.
Do you charge any initial fees? Most brokers work exclusively on commission, but some will require you to pay a fee before the process even kicks off. Be sure you are clear on all the costs involved.
How many lenders do you have in your network? Having more options is always better so that you know you are getting the best deal. The lender should bring you a diverse array of choices, including both bank and non-bank lenders.
How does your commission structure work? Asking about commission structure helps you make sure that the broker’s incentives are aligned with yours, rather than just their own profits.
Is your firm associated with one particular bank? If the mortgage broking firm is owned by a bank, the broker will likely steer you towards that parent company. If their preferred bank doesn’t accept you, it could make the loan process much harder.

Mortgage broker FAQ

Why should I use a mortgage broker?

A mortgage broker guides you through the loan application process and helps you find the best loans available. Once you have an offer accepted, the broker keeps the process running smoothly while also breaking down the important information for you.

Can a mortgage broker help with my investment property?

Brokers work with a variety of banks and will do all the legwork to find you the most affordable loan offer. This makes sure that your costs are kept low and you get the maximum return on your investment.

Can a mortgage broker help me if I have bad credit?

Brokers know where to look for specialist lenders who are more willing to accept a loan applicant with weaker credit history. Your broker can also strengthen your application to boost your chances of approval.

Can you have two mortgage brokers?

This is usually possible, but generally not recommended. Having additional brokers will often overcomplicate the process without actually giving you much of an advantage. It is best to pick one broker with a wide range of lender connections and stick with them.

Key things to remember about mortgage brokers

Buying a house can be intimidating, but with a mortgage broker, you don’t have to go through it alone. These financial experts can help you navigate the process and connect you with some great loans, although it’s important to verify that they know what they’re doing and that they are truly on your side. With our tips in mind, you can confidently find the best mortgage brokers in Australia.

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