A mortgage broker is a home loan expert whose job is to support you through the process of financing a new home, buying an investment property or refinancing an existing property. Whether it's your first home or your 20th, many Aussie borrowers find mortgage brokers helpful to have in their corner.
Given a home loan is likely to be the most significant expense you ever commit to, the process can be daunting and professional advice will help inform your decision to dive into the market. By narrowing down the search and taking care of the loan application process, having a mortgage broker could save you time, effort and money.
How much does mortgage broking cost?
Let's get straight to the point. Most of the time, mortgage brokers are paid via commission from the lender. That means that as the customer, you don't owe them any money. Make sure that you ask your broker upfront if they will charge you a fee for their service, as there are plenty of brokers that do not.
While this might seem like a fantastic deal, it's important to note that because of this, it's crucial to find a good broker that you trust. Some mortgage brokers might choose a loan that gives them the most commission, not the one that is best for you.
While this is rare, if you are not comfortable with the first broker you go to, you can change at any time. It will help to do some research before choosing which broker's service to go with.
To help come up with a shortlist, you can check your finance broker against the following terms on the Australian Securities and Investments Commission's (ASIC) website: Credit Registered Person, Credit Representative and Credit Licensee.
What a broker does for you
Firstly, a mortgage broker will ask you questions about things like your income, tax, existing commitments, monthly spend and investment goals to paint a detailed picture of your case and what you want to get out of your home. They'll use this information to calculate the amount of money a lender will loan you.
Next, they will search their database for the best options banks, credit unions and other credit providers are offering, allowing you to compare home loan products side-by-side. Once they've explained the terms of each loan — your repayments, the loan's comparison rate (or actual cost) and any upfront, ongoing or hidden fees — they will make a recommendation of the right home loan for you.
Once you've chosen the loan that works for you, your mortgage broker will complete and submit your home loan application, liaising with lenders on your behalf until everything is settled.
Mortgage brokers vs banks
It's generally believed that a mortgage broker is preferable to going directly to a bank because they can give you a more comprehensive view of the market and its products. They won't charge you any fees and can be a great help when it comes to explaining the terms and conditions of the loan.
The advantage of a bank is that they might be able to package other products into your mortgage, such as credit cards or savings accounts. However, you might have a more challenging time getting a loan from a bank, and they won't tell you if there's a better deal offered elsewhere.
When should you talk to a mortgage broker?
You can go and see a mortgage broker no matter what stage you are at in your journey. You can get advice about your deposit, a second opinion on a loan product you're already looking at, and even step in at the last minute if you've found your dream home and are leaping to buy.
If you're a first home buyer, it could help to visit a broker early and get your head around the finances, which can be daunting. They will also give you clarity around your loan amount, what to expect and how to get organised. Later down the track, a mortgage broker can also help you understand refinancing if your circumstances change or you want to buy another property.
Choosing the right mortgage broker
When you engage a mortgage broker for the first time, you should feel free to ask questions about the process and the industry. Here are a few questions that you might like to note down before meeting with your broker:
- How many different lenders do you represent?
- What information do I need to provide for my home loan application?
- How much will I need to deposit to avoid lenders mortgage insurance?
- Which type of loan best suits my needs?
- How are you getting paid for the service you are providing me?
- Does each lender offer you a different commission rate, or are they equal?
- Do you have an Australian Credit Licence?
- Are you a member of the MFAA (Mortgage Finance Association of Australia)
Choosing the right loan
When it comes to choosing your home loan, aim to get a strong understanding of the answers to these questions:
- What is the interest rate?
- Can I fix my interest rate at a later stage?
- What other financial services does this particular lender provide?
- What fees are involved with me taking out this loan?
- How long will it take for my loan to be approved?
- What is a pre-approval process for this loan?
- Are there any other features or benefits that I will receive with this loan?
- Can you show me multiple options, including the loan with the lowest overall cost?
Does Metricon assist with finance?
To help our customers on their journey, Metricon has finance partners who may be able to assist you with your home loan. You can get in touch with them via this page.
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