There are many benefits of using a Mortgage Broker, but you need to be confident that the one you deal with is acting in your best interests. In recent times there has been some negative press about a few individuals who haven’t put the clients interests first. This is a shame as most of the mortgage brokers I have met have the clients best interest as their first priority. Mortgage Brokers currently write just under half of all home loans taken out. This number is set to grow to well over 50% in the next few years. Why? When you go to your bank and ask about a home loan, they will give you the best product/rate that is available from that bank. At Illawarra Mortgage Brokers we have access to the same lenders and products as brokers in other parts of the country, you are able to have your situation reviewed against a wide range of lenders and get the same products without the need to travel. We can also negotiate additional discounts in a lot of cases. With a wide range of lenders, some of the suggestions you may receive, could be lenders you don’t know much about or indeed haven’t heard of. Sometimes the smaller lenders have a better interest rate or feature than a major lender. This may be because they have more flexibility or are driven by providing a benefit to the member rather than a shareholder.
Mortgage Broker Fees
This is a big topic in Mortgage Broker circles. At present the lenders pay a commission on the introduction of new home loan business. They also pay a retainer to the brokers to be there to answer questions during the life of the loan. Very few brokers charge an additional fee to the client for arranging a home loan. In the past some brokers charged customers fees in addition to the commission received. (There aren’t many of these fee structures left in the industry). This is however a good question to ask a broker you may be thinking of using. ” Do you charge the client a fee to arrange a loan” If they do, check with another broker or two to see if the advice you are getting is consistent.
Mortgage Broker Independence
Because a Mortgage broker can’t possibly represent all financial institutions ( there are over 450 different institutions in Australia) they are prohibited from calling themselves “Independent”. Some however are less controlled than others. The major banks own a large portion of the mortgage broking groups in Australia. Another good questions to ask your prospective broker is ” Are any of the loans you are suggesting issued by a lender that owns or controls your organisation?”. A broker that is in a bank owned group can still offer you a wide variety of loan options. You may get the same selection suggested to you by a broker not in such a group. As long as you know if there is any link, you can make an informed decision. Mortgage brokers are required to be licenced and you can check if the broker you are talking to is licenced with the broker Association MFAA here, or the FBAA here In summary, If you want an experienced professional to navigate the available options and to do the “heavy lifting” for you in terms of negotiating the policy and interest rates of a lender, then a broker who will advocate on your behalf will make the whole transaction easier than doing the work yourself. The service shouldn’t cost you anything to take advantage of, and you may even get a better deal that if you did it yourself.