What is a mortgage broker and should I use one?
Estimated read time: 4 Minutes
Buying a new home is exciting, but with so many lenders to choose from and so many different types of home loans available, finding the right loan to meet your needs can be tricky. So, you may decide it’s easier to get help from a mortgage broker when looking for the right home loan.
4 in 5 Aussies who'd previously used a mortgage broker said they'd do so again.1
What does a mortgage broker do?
Mortgage brokers arrange home loans between lenders, and borrowers – people who are looking for a home loan. They can discuss your home loan needs and goals, find home loan options to suit your situation and assist you with the application process.
Brokers should take the time to understand your individual situation, work out what you may be able to afford to borrow, provide you with home loan options, discuss how each option will meet your requirements, and let you know much the loan will cost.
Once you’ve decided which home loan suits your needs, the broker can assist you with the application process all the way through to settlement of the loan with the lender.
Did you know? Mortgage brokers are paid by lenders, so you may not have to pay the broker a fee for their services.
Tips to help choose a mortgage broker
Check the broker's accreditations
- Check ASIC’s list to ensure the broker is licensed.
- Check the broker’s membership with either the Mortgage and Finance Association of Australia or the Finance Brokers Association of Australia.
- Check online reviews to see what other customers have said.
Are they asking enough questions?
- Mortgage brokers should ask you a lot of questions about what you want in your home loan as well as about your financial situation. This might include:
- Your employment history, salary, relationship status, dependents
- Household income and expenses
- Your main requirements and objectives (e.g. fixed or variable loan, an offset account, credit card).
Meeting your mortgage broker
Once you’ve decided to meet with a mortgage broker, it’s generally a good idea to make sure that your paperwork is in order before you meet them for the first time – including your financial and employment records.
Consider the ‘must have’ and ‘nice to have’ requirements for your home loan (e.g. do you want to be able to make extra repayments, have branch access). You might also want to think about how long you’d like the loan term.
It’s also a good idea to have a few of your own questions ready to ask the broker.
Some questions you could ask include:
- Which/how many lenders are on your panel?
- How do you get paid and does this differ between lenders?
- Why did you recommend this loan to me?
- How does each loan option work?
- What features and options come with each loan option. How do they work and how do they meet my requirements?
- What are the fees and charges for each loan option?
- What information will I need to provide for the loan application?
- Will I need to pay lender’s mortgage insurance?
If you have chosen a suitable home loan option, it is a good idea to ask for the option in writing so you can check the details. And remember, if you don’t like the options provided, you can request other recommendations, or even find another broker.
A home loan is a long-term commitment and generally one of the most important financial decisions of your life. So, you need to be comfortable that you’re choosing the right home loan for your own situation. A mortgage broker could help by talking you through each step, and helping you understand your options, so that you can make a decision.
Answering your top questions about mortgage brokers
Is it cheaper to get a mortgage through a broker?
Mortgage brokers can have access to a wide range of lenders, so they can be a good way to understand what offers are currently in-market, and most of all, talk to someone about what could work for your situation. While most brokers don't charge for their services (as they are paid via a trailing commission if you take out a loan through them) they sometimes may have access to industry rates that banks aren't offering to the public. However, as always, it pays to do your own research.
Mortgage broker vs bank: which is better?
This will depend on your situation. While a broker will have access to a wide range of lenders and can help you compare products, they generally won't have access to every product available on the market (some lenders only offer direct-to-consumer loans) so it could be a good idea to do your own research first to understand what offers are available, and what value looks like to you.
Source: 1 This research was conducted by PureProfile on behalf of Pepper Money with a representative sample of 1,010 respondents in Australia aged 18-65+ years old. The research was in field from 11th July 2022 until 15th July 2022.
Contributor | Barry Saoud, General Manager, Mortgages and Commercial Lending
Barry joined Pepper Money in July 2021 as General Manager, Mortgages and Commercial Lending. He is responsible for the strategic direction and operating performance across product, credit, and settlements for mortgages, commercial loans, personal loans, and direct sales. Read more.
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