What Is A Mortgage Broker?

Mortgage Brokers act as an intermediary who serve to bring Home Loan borrowers together with suitable mortgage lenders. Mortgage Brokers do the shopping around for the borrower and in most cases collect their fee from the chosen lender rather than from the borrower.

Should You Use A Mortgage Broker?

The easiest way to look at it is you engage a Mortgage Broker for the same reason you take your car to a professional mechanic or book your holidays through a Licensed Travel Agent. They have specific industry knowledge and daily experience in the complex Home Loan Marketplace. This often means that borrowers end up with a more suitable mortgage than if they did all the research and "leg work" themselves.

What Do Mortgage Brokers Actually Do?

The basic tasks of an Australian Mortgage Broker are listed below, these duties differ on a case by case basis:

• Discuss the borrowers needs and preferences regarding Home Loan Finance.
• Determine the borrowers current financial situation.
• Determine the clients borrowing power - find out how much they can borrow.
• Shop around for the borrower to find the most suitable Home Loan available.
• Gather together all the documents the banks and lenders will need when assessing the application.
• Provide a clear loan comparison in writing.
• Help with preparing and then lodgement of the loan application forms.
• Track the loans progress with the lender and keep the borrower informed right through to loan settlement.
• Stay in touch with the borrower throughout the term of the loan and assist with loan top ups or refinancing.

How To Choose A Reputable Mortgage Broker In Australia

Like in any industry, there are good and bad Mortgage Brokers. In Australia three of the biggest mortgage broking companies are Mortgage Choice, Aussie Home Loans and Australian Finance Group. They all offer a similar service but there are some things you can do to ensure you end up with a qualified, experienced and trustworthy broker. Some questions you should consider when choosing a Mortgage Broker:

• Do they charge for the service?
• Are they paid the same commission no matter which loan or lender the borrower chooses?
• Do they explain all of the fees and charges associated with the mortgage?
• Are they independent or do they only deal with a certain lender?
• Are they qualified, experienced and have testimonials from happy clients?
• Do they explain the effective interest rate of the loan?
• Do they justify their recommendations?
• Do they carry professional indemnity insurance? (which protects the borrower)
• Do they have access to a wide range of lenders and therefore loans?
• Do they belong to a reputable industry association? (The MIAA in Australia)

How Much Does A Mortgage Broker Cost?

In the vast majority of cases Mortgage Brokers do not charge their client (the borrower) anything for the service they provide. The brokers are paid by the lenders for introducing a customer to them.