What is a mortgage broker & what do they do

Before taking out a home loan learn what a mortgage broker is and what they can do for you.

Article published 29 November 2021

What is a mortgage broker?

A mortgage broker is a third party who will act on your behalf to arrange your home loan application. Instead of working directly with a bank or financial institution, a mortgage broker can work with various lenders to find the right home loan for you. 

A mortgage broker is able to assist throughout your home buying process, by providing you with pre-approval to get an understanding of your borrowing capacity and assisting you throughout your application process when you have found your home. 

What do mortgage brokers do?

A mortgage broker can provide you with many services that will improve the overall quality of your home buying journey. Regardless of whether you are a first time home buyer, looking for an investment property, upgrading your current home, or looking for a better deal on your mortgage, a mortgage broker can assist. 

Services offered by a mortgage broker: 

  • Understanding your financial needs and goals 
  • Calculate your borrowing capacity and even get pre-approval on your home loan. 
  • Compare your options across thousands of loans and various lenders to find the best for your situation. 
  • Provide expert advice on a range of home loan related topics, such as incentives for first home buyers, how you could use your home equity, the different types of loans and features available, and any possible fees that you may incur. 
  • Coordinate your application with a lender and manage the process through the settlement. 

Why You Should Use a Mortgage Broker

Using a mortgage broker can help you take the time and hassle out of shopping around for the right home loan. A mortgage broker is able to help you in your home loan journey by guiding you through the entire process with expert advice. 

Compared to going directly with a bank, a broker is able to understand your financial situation and find the right home loan for you by comparing thousands of loans across multiple lenders and is not limited to the offerings of just one lender. 

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Pros and Cons of using a mortgage broker

Pros

Cons

Convenience

Not all lenders are available

Brokers do the legwork

Time consuming to find the right broker

Expert advice

Pre-qualification

No cost for home loan service

Benefits of using a mortgage broker 

Convenience

Mortgage brokers are generally willing to make appointments at the time and place that’s convenient for you, including after work hours or on weekends. This can be a huge benefit if you’re time-poor or have work or family commitments to consider.

Brokers do the legwork

Your mortgage broker will do all the legwork in finding the right home loan for your needs and support you throughout the entire application and settlement process. This includes doing all the paperwork, sourcing pre-approval, helping you to apply for any government grants or incentives that you may be eligible for, and keeping you up to date with the progress of your application. 

Expert advice

A mortgage broker can explain the various subtleties of different loans which can make a big difference to the bottom line. Factors such as the ability to make extra repayments or having access to a loan offset account may end up being crucial factors in your selection process. Having someone to take you through the pros and cons of different options can be extremely valuable in ensuring you end up with the right home loan.

Mortgage brokers also have real feedback from other clients on how various home loans have performed, giving them additional insight into how various loans are likely to perform for you.

Pre-qualification

Something to keep in mind is that every time you apply for a home loan and are turned down, no matter what the reason, it leaves a mark on your credit history. Mortgage brokers use specialised software to access the latest loan information across a range of lenders and match this against your individual situation and goals. This helps your broker to determine  what your borrowing power really is, and which lenders are the most likely to be willing to lend you the money you're looking for. Therefore your broker can help you to identify which lenders your application is most likely to be successful with and reduces the chance that you’ll be turned down numerous times.

No cost for home loan service

While it's not always the case, many mortgage brokers (including Mortgage Choice brokers) can offer their home loan service free of charge to their clients because the lenders pay a commission when the loan is settled. This means you can tap into all of the benefits listed above at no cost to you.

Disadvantages of using a mortgage broker 

Not all lenders available 

While a mortgage broker can compare your situation across multiple lenders, not all lenders will be available on their panel. If there is a specific bank or financial institution that you would choose to use for your home loan, it is best to understand if your broker is accredited with that lender or you may need to apply directly with the bank. 

Time consuming to research brokers 

Although the majority of brokers will work in your best interest, it’s important to do your research and understand the qualifications of the broker you choose to work with. 

With all the competition out there, there is a lot to consider when choosing the right broker and this can be overwhelming and time consuming. When first meeting with your broker, asking lots of questions to get an understanding of how they operate and why they recommend certain products can be a helpful way to ensure you’re happy with their service and have found the right broker for you. 

When should you see a mortgage broker?

When it comes to buying property, it’s never too early to get expert advice! Regardless of where you are in your home buying journey, if you are ready to start exploring your options, you should see a mortgage broker to get a better understanding of your situation and get expert advice on the right home loan for you. 

Your mortgage broker may even be able to find loans that let you enter the housing market sooner than you thought. Whether you’re a first home buyer, investor, looking to refinance your home loan or even upgrade to your next home purchase a mortgage broker is here to help. 

How much does a mortgage broker cost?

Mortgage Choice brokers offer our home loan service at no charge because the lenders pay us a commission on home loan settlement. So you can tap into our mortgage brokers’ wealth of home loan expertise and save yourself a lot of legwork at no cost.

How and when does a mortgage broker get paid?

A mortgage broker will get paid a commission by the lender when your home loan has settled. However, at Mortgage Choice we pay your broker the same rate of commission no matter which home loan or lender you choose. The only thing that matters is finding the right home loan for you. 

Finding the right mortgage broker

At Mortgage Choice, you can be confident in finding the right mortgage broker for you. All our brokers are licensed and accredited to a variety of lenders from our lender panel.

Choosing a Mortgage Choice broker can take the time and hassle out of shopping around for the right home loan, as they guide you through the home buying process providing expert advice at every step.

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Posted in: Mortgage brokers