How mortgage brokers find you a good deal
- 1 What does a mortgage broker do?
- 2 What do mortgage brokers charge?
- 3 What do mortgage brokers look for?
- 4 How to choose the right mortgage broker
- 5 How a mortgage broker can help you today
- 6 Step-by-step guide
- Nearly 60% of Australians organise their home loans through a mortgage broker.
- A mortgage broker is a professional who provides general and financial advice to those planning to take out a home loan. They can also assist you with the home buying process.
- Working with a mortgage broker can give you access to better strategies and expose you to options that are more suitable to your unique situation. It can also simplify the mortgage application process, especially for those new to home ownership.
- Rather than charging you a fee, most mortgage brokers make their money through earning commissions from banks and lenders.
- The relationship you have with your mortgage broker is a two-way street. They will want to learn about your goals, and you will want to know how they can help you achieve them.
What does a mortgage broker do?
Whether you’re a newbie on the property ladder or looking to buy your second or third home, extra help never goes unwelcome. This is where mortgage brokers come into the picture.
A mortgage broker can help you throughout the process of securing a home loan from start to finish. More specifically, they will:
- Establish a clear understanding of your home loan needs and goals
- Help you understand the differences between available products, help you compare products to find a good deal, provide quotes
- Help you find and secure the right home loan for you and, ultimately, get the application process underway
The housing and finance markets are constantly in flux and ever-shifting. For a regular person who doesn’t work in finance, these changes can be overwhelming. Mortgage brokers are seasoned professionals who understand the industry. They can help you navigate the complexities of the home ownership path and potentially save you thousands of dollars down the track.
When searching for loan products, Google can seem like a tempting option. But a mortgage broker is a real-life person qualified to help you sift through all the noise to get the best product for your unique needs.
This is why almost 60% of Australians use a mortgage broker to arrange their home loans.
But how exactly does a mortgage broker find you a good deal?
Give strategic advice
The strategic advice a mortgage broker offers can potentially save you time and money, making the application process effective and stress-free.
Good mortgage brokers are well-versed in the industry, with an arsenal of up-to-date tips and tricks up their sleeves. They will take your budget, your situation and your long-term goals into account when helping you find a home loan.
Present your options
The amount of loans available on the market right now is staggering. Comparing and contrasting all the products out there can be a time-consuming process for anyone.
For example, if you’re self-employed, recently on maternity leave or don’t have the best credit history, this could make finding a quality loan complicated. A mortgage broker may know which banks and lenders look after people in this situation, and can then direct you to the right place.
Simplify the process
One you’ve both identified an attractive home loan product, you’re not finished yet. You’ll need to apply, and the bank or lender will likely request that you provide information regarding your personal situation, financial abilities and intentions. A mortgage broker can handle this process, giving you a higher chance of fast approval from your desired lender.
Think of a mortgage broker like a middleman, or a ‘go-between.’
What do mortgage brokers charge?
Some mortgage brokers may charge a fee for their services. But the good news is that many mortgage brokers, generally speaking, won’t charge a thing.
For example, the mortgage brokers at Home Loans Australia offer full brokerage services free of charge. They’re available to help you compare home loans, answer your questions about loan features, structures, fees (and more) and make your options easy to understand. Once you’ve found the right home loan for your needs, they’ll also help you with the application process from start to finish.
This might leave you scratching your head, thinking, “Well, how do they get paid?”
Good question. Mortgage brokers make money the way many finance professionals do: through commissions. When you go with a product they’ve recommended, the lender of that product will often pay them for your custom.
If you’re concerned that the mortgage broker may be biased in recommending you certain products (due to the higher rates of commissions certain credit lenders will pay them over others), you can choose to discuss loan products that they haven’t specifically recommended. It can also be useful to ask about the lenders they compare, and how many are on their panel. It’s important that they compare a good mix of lenders—both big and small—and remember, the more options you have, the more likely you’ll be able to find the right loan for you.
At Home Loans Australia, we currently compare 25+ lenders, including ANZ, Commonwealth, ING, Macquarie, NAB, Suncorp, Westpac and more. Good mortgage brokers will give their honest opinion about which type of home loan you should go for in consideration of your circumstances, and direct you to the right people to get things going.
The best case scenario is that the broker is able to access a better industry deal than you would have been able to on your own, and save you a lot of time and money in the long-run.
What do mortgage brokers look for?
Mortgage brokers are generally happy to work with anyone interested in securing a home loan. You could be a newly married professional simply wanting to know what’s out there, or a seasoned property buyer looking to secure your next investment.
It does, however, help if you have a solid idea of what you’re looking for so that the mortgage broker can serve you best. That’s why it’s a great idea to establish clear goals from the beginning.
When you contact a mortgage broker, they may ask the following questions:
- Is this the first time you’ve planned to take out a mortgage?
- Are you hoping to move to a bigger home, a nicer area, or both?
- Do you want to pay off your home loan faster than the agreed loan term?
- Are you financially prepared to take on the cost?
- Are kids on the cards? As a result, would you perhaps need to reduce your repayments during maternity? (Note: some lenders provide a solution to this short term earnings problem)
- Have you paid all your debts and bills on time?
- Is this just a one-off purchase or are you looking to expand your property portfolio with multiple investments?
- Do you want to unlock the equity in your home?
- Do you think you’d like to renovate at some point?
If you’re unsure about any of the terms or implications in these questions, a mortgage broker will gladly explain what they mean. But doing your research and figuring out your vision will go a long way in helping your mortgage broker to get a headstart in recommending the best product for you.
How to choose the right mortgage broker
Just like home loan products, there are a lot of mortgage brokers out there.
Some Australians like to go through an independent broker, while others prefer to go through someone they know, a bank or an online conglomerate.
Luckily, through the internet, it’s easy to get started. Popular websites like Home Loans Australia allow Aussies to access a team of mortgage experts with the click of a button.
When you’ve been matched up with an adviser, you may have some queries regarding how they can help you.
Questions to ask
Here’s a comprehensive list of questions you can ask your mortgage broker to make sure they’re the right person to manage your search for a home loan:
- What features will I need in my home loan to suit my needs?
- Do you offer a range of different lenders? If so, how many?
- How do you decide which loan to recommend?
- What experience do you have as a mortgage brokerage? Are you a licensed professional? Have you dealt with others in my situation before?
- What benefits will I get from going through you instead of my bank?
- What commissions do you get paid for writing my loan?
- Are there any extra or hidden fees in this service or in the loan you advise? What will be the ultimate cost I’ll need to pay in the long-run?
- How long will it take me to pay off a loan? What are my options here?
- Can I make overpayments to get the loan paid faster, and conversely, what happens if I need to reduce my payments in the future due to an unforeseen expense?
- What documents will I need to provide to get my application approved?
- How long will the process take to get me an unconditional approval?
- What do you think about fixed rates versus variable rates?
- How much am I able to borrow?
When you’re clear on the above, you’ll feel more confident that you’re in good hands. Your mortgage broker will also get a better understanding of your needs, and tailor a strategy accordingly.
A great resource is Home Loans Australia, where the latest news and guides on the property industry are regularly published. Here you can also get access to a team of mortgage experts, qualified to help you get started on comparing and understanding home loans.
Other reliable resources include Moneysmart, a financial advice website sponsored by the Australian Securities and Investment Commission (ASIC), and the Australian Property Investor magazine.
How a mortgage broker can help you today
If you’re still wondering how mortgage brokers find you a good deal, consider the facts:
- Mortgage brokers are generally licensed finance professionals, qualified to provide tailored advice to help you find the best home loan possible for your needs.
- They’re likely to be familiar with a wider range of different home loan products than many home-buyers have time to research on their own.
- Though mortgage brokers may receive a commission from lenders, good brokers will try to find the best deal for your situation when recommending a product.
- You’re free to ask your mortgage brokers any questions based on your own research, and get assistance with comparing and contrasting different loan products.
- Most mortgage brokers charge no fee, making the process cheap and easy for you.
Still feeling overwhelmed? You’re not alone.
But luckily, a mortgage isn’t something you need to organise all by yourself.
The best way to begin is by consulting an expert: either a qualified mortgage broker or someone else in the finance industry who you recognise and trust.
Many Australians get started by visiting Home Loans Australia, an easy-to-use loan comparison website. It’s powered by eChoice, one of Australia’s leading and award-winning mortgage broking groups.
With over 15 years of experience under their belt, this national network of fully accredited mortgage brokers have helped more than 50,000 Australians find the right home loan.
To get started, simply follow these steps:
- Head to HomeLoansAustralia.Com.Au
- Spend 2 minutes filling out a brief questionnaire so we can better understand your needs.
- Enter your contact details for a personalised report.
- Click ‘get my deal’ and compare loans from over 27 lenders.
Fees, charges, terms & conditions apply.