Mortgage Brokers? Who? What and Why?

Mortgage Brokers. Who are they? What do they do? Why do people employ them?

A Mortgage Broker is a specific type of Financial Advisor whose job is to assist their client to find the right Mortgage. As a professional in their field, a Mortgage Broker has up to date market information and takes the leg work out of finding the right options for finance.

People employ Mortgage Brokers to assist in painting a picture of their credit worthiness, discovering what options are available for types of finance as well as practical advice on realistic borrowing capacity. Often, they will then go on to assist in dealing with the paperwork involved in the application, and actually even submit the application on their clients’ behalf and offer a very personalised service.

Generally speaking, Mortgage Brokers will be selecting options from a variety of lenders that they act for. Keep in mind that they often do not survey every single option that is available by every single bank and lender on the market. It is worth asking any prospective Broker how many lenders they deal with. If it is only a few, then you may want to search elsewhere; there are plenty of online comparison platforms that you could easily compare more with at the click of a button. Finding a Broker that deals with many lenders and is able to talk you through and understand your needs can be an invaluable resource, especially for those who may have limited or poor knowledge of finance. Though it is good to remember that a Mortgage Broker may not be the best option for some.

Did you know that the Mortgage and Finance Association of Australia (MFAA) is the peak national body for Mortgage and finance brokers? You should ensure your broker is a member of the MFAA before signing up. As a part of their Code of Practice, they ensure that all members disclose their fees and commission structure, meaning there is no grey area about where their fee is coming from. As a rule of thumb, ideally, they would be paid the same amount of commission by all lenders they act for, therefore it does not benefit them financially in any way which option you ultimately decide, and bias does not steer a preference.

Whether you decide to engage the services of a Mortgage broker to assist in the search for the perfect finance option for you, you should still do your research. With a new home potentially being the biggest investment of your life, you need to ensure that any broker you are looking at holds appropriate educational qualifications and extensive industry experience.

With over half of all Australian Home Loans now being applied through the assistance of a Mortgage Broker, this is certainly an option any prospective home buyer should look at.