If you’re thinking about securing a home loan, you really have two options. You can go straight to a lender (e.g. a bank) or you can visit a mortgage broker (e.g. Mortgage Choice). If you chose a lender, often it’s because you have a long history with them, a relationship with a branch manager or you simply have a sense of comfort with that institution. But in the competitive marketplace we live in now, it really does pay to have choices.
Smaller lenders, or ones less familiar to you, might provide you with a more competitive interest rate and save you thousands over the life of your mortgage but without the skill or expertise of a mortgage broker – you might never have heard of them.
“A broker will evaluate your needs, compare home loan products from a range of lenders, help you calculate your borrowing power, help you get pre-approved for a home loan and more,” Susan Mitchell, CEO of Mortgage Choice said. “They can help take the hassle out of finding the right home loan by helping you understand your options, explain jargon and when the time comes, negotiate with the lender on your behalf to get you a good deal.”
The beauty of a broker is that there is no fee for having them help you choose a home loan. “Brokers are paid a commission by the lender once your home loan settles,” confirmed Susan Mitchell. “At Mortgage Choice, your broker earns the same rate of commission regardless of the lender you choose.”
Sometimes this idea of ‘working for commission’ can portray an idea that brokers are just selling you whichever loan will give them the largest commission or that there might be back door deals happening. But financial regulators have ensured that the broker industry acts transparently and ethically. “Brokers are required to operate under a licence structure to ensure compliance with the National Consumer Credit Protection Act; they are also obliged to adhere to other major legislative obligations when it comes to managing client information, privacy and consents etc,” Susan said. “From the 1st of January 2021, mortgage brokers will be required to comply with the best interests’ duty obligations set out in The National Consumer Credit Protection Act 2009 (National Credit Act), which requires mortgage brokers to act in the best interests of consumers when providing credit assistance.”
So if you choose to use a broker, how can you ensure your broker is working to find you the best option? Susan Mitchell suggests asking the following questions:
- How many lenders are on your panel?
- How many do you actively use?
- How do you get paid?
- Do you get paid more to recommend a particular lender/product over another?
- Why are you recommending this loan to me?
To learn more about how a broker can help you, click here.
To learn more about what makes a Mortgage Choice broker different, click here.
For further FAQs, click here.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.