What do mortgage brokers do?

A good mortgage broker can help you to:

• Work out your financial needs and property goals;
• Calculate how much you can afford to borrow and comfortably repay;
• Find a range of home loan options that could suit your needs, which may include broker-exclusive home loans that aren’t typically advertised;
• Compare the interest rates, fees, features and benefits of different home loans;
• Negotiate with a lender to help you get a better deal, and;
• Manage the application process, including keeping track of the paperwork.

Brokers must be licensed and registered with ASIC and are typically members of professional industry associations such as the Finance Brokers Association of Australia Limited (FBAA), the Mortgage & Finance Association of Australia (MFAA), or the Mortgage Industry Association of Australia (MIAA).

Mortgage brokers are obliged to act in your best interest, so you can be confident about the advice they offer. However, it may be sensible to check the validity of your chosen broker’s licence. You can use the Australian Securities & Investments Commission’s (ASIC) Connect's Professional Registers to confirm the legitimacy of a broker’s licence or phone ASIC's Infoline on 1300 300 630 for further assistance.

Save time and effort

Comparing home loans can be intimidating and time-consuming, especially if you’re unfamiliar with the mortgage market. Getting a broker to do a lot of the hard work for you could help you quickly find a shortlist of mortgage options that could suit your financial situation and personal goals. Brokers can also negotiate with lenders on your behalf, which could help you get the deals you want.

Expert advice

As a prospective buyer you may not be aware of all the options available to you. If you aren’t sure which home loan may best suit your needs, a mortgage broker can offer specific advice around how different loans could help you reach your goals.

Borrow more

Between a broker’s familiarity with lender eligibility criteria, and their access to special broker-only deals that aren’t usually advertised, you may be able to maximise your borrowing power, which could expand your home buying options.

Improve your chance of approval

A broker can help you to fill out your home loan application so that every necessary box is ticked and accompanied by the right documentation, so there’s less time-consuming back-and-forth with the lender due to missed signatures or clarifying questions. These applications can often be processed faster, which could give you access to pre-approval sooner.

Help for specialist borrowers

Self-employed freelancers, contractors, small business owners, and other Australians who can’t provide payslips as proof of income could struggle to successfully apply for standard home loans. A broker may be able to put you in touch with lenders that are more likely to accept your financial circumstances and help you get your application together.

It’s usually free

Most mortgage brokers in Australia won’t charge you a fee for their services. Instead, they’ll be paid a commission by the bank or mortgage lender when you sign up with them as a new mortgage customer.

You don’t compare the whole market

Brokers need to be accredited with a particular lender to be able to work with that lender. A typical broker will be accredited with anywhere from 10 to 30 lenders, such as the big four banks, smaller banks, credit unions and non-bank lenders. By doing your own research, you could potentially find an alternative lender that the broker doesn’t work with, which is also offering a deal that suits your circumstances.

Risk of bias

While brokers are obliged to act in your best interest, there is still a risk that your broker could still be biased towards a particular lender, which may not offer the best option for you.

Fees for commission-free service

One way to avoid some of the potential bias risk of using a broker is to choose a broker that doesn’t take commissions from banks. However, these brokers may be hard to find in Australia, and you’ll need to budget for their fee alongside your other upfront home loan costs.

Relying on a third party

Not every broker can meet your expected level of customer service. For example, if you get stuck waiting on a broker to get back to you on an urgent matter (brokers are often looking after many clients simultaneously), in a worst-case scenario you may not receive your pre-approval in time to buy your dream property.

It can be difficult to separate the good brokers from the average brokers. To make the process easier, here are 10 questions to ask while you’re shopping around for brokers and deciding which home loan is right for you.

There are a few different ways you can begin your search for a mortgage broker. However, don’t limit yourself. It’s sensible to explore a range of avenues. We've put together a handy guide to help you navigate the process in order to find the ideal mortgage broker for your needs.