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How do Mortgage Brokers work

Why use a Mortgage Broker?


As the Home Loan market gets increasingly complex, more and more people are turning to Mortgage Brokers to arrange their finance. Because Mortgage Brokers have an understanding of the loan process and the criteria used by Lenders in evaluating borrowers, they are able to make sure your loan application is completed quickly, correctly and that you get a loan which is right for you.

Here are a few other points to consider when using a Mortgage Broker

  • They will work with you to identify your needs
  • They have access to an array of loan products from many different lenders 
  • They will help you to understand the various deals that are on offer, explaining all the features and details
  • They will lodge your application for you
  • They will deal with the Lender for you
  • They will arrange all paperwork necessary to secure the mortgage
  • They will be there after your loan has settled and will work with you to ensure your loan continues to offer you the outcome you need.

Mortgage Brokers: education & experience

In most states, anyone can claim to be a Mortgage Broker. To help you negotiate the complex Mortgage market, you need someone with knowledge and experience. Ask your Mortgage Broker about their credentials. All Mortgage Advisers working with themortgagebrokers.com.au must hold a Certificate IV in mortgage lending and be members of the MFAA (Mortgage and Finance Association of Australia).

How are mortgage brokers paid?

Your Broker should have nothing to hide. Don't be afraid to ask what they are being paid for their Home Loan recommendations. MFAA's Code of Practice requires Mortgage Brokers to reveal the commissions they are being paid by a Lender on a particular Home Loan product. AS a rule, the amount we receive is directly linked to the amount you borrow. We receive 2 different commissions from the lender.

  • First is an upfront commission which as the name suggests we are paid as a lump sum. This is based on the amount you borrow.
  • Secondly, we receive a trail commission. This is ongoing for the life of the loan and is a percentage of your loan balance.  

Your Mortgage Broker will have no problem in explaining exactly how we are paid. Just ask. 

Do you use all lenders?

There are 100’s of lenders in the home loan market. These range from large national Banks down to small local Credit Unions. Some of these smaller institutions are not geared up to deal with mortgage brokers. We have a good cross section of big and small lenders. This includes all 4 major banks as well as smaller banks, Credit Unions and non bank lenders. This allows us to present you with a variety of loan options.

How does a broker recommend one loan over another? 

The best deal is not always the cheapest rate. A good Mortgage Broker will ask questions and take future plans into account. Ask your broker how they compare loans and how they determine which loan is best for you. Comparing loans is not an easy task. Make sure the broker can provide you with a clear explanation of the methodology and criteria they use. If they are unable to do this be wary, as they may be basing their decision on the size of the commission they will receive.

What else to look for in a Mortgage Broker

  • A member of the Mortgage and Finance Association of Australia (MFAA) www.mfaa.com.au
  • Part of a reputable aggregator. themortgagebrokers.com.au is part of the Australian Finance Group. www.afgonline.com.au
  • Happy to disclose fees and commissions
  • Covered by Professional Indemnity insurance
  • Has access to a broad panel of financial institutions
  • Takes the time to understand your needs and assess your options
  • Must be part of an External Dispute Resolution Scheme such as Credit Ombudsmen Service Limited (COSL) www.cosl.com.au.