A mortgage broker is a go-between who deals with banks or other lenders to arrange a home loan. Mortgage brokers must act in your best interests when suggesting a loan for you.
A good broker works with you to:
- Understand your needs and goals.
- Work out what you can afford to borrow.
- Find options to suit your situation.
- Explain how each loan works and what it costs (for example, interest rate, features and fees).
- Apply for a loan and manage the process through to settlement.
HOW MORTGAGE BROKER GET PAID
Often, lenders pay the broker a fee or commission for selling their products, so you don’t pay the broker anything.
Some brokers get paid a standard fee regardless of what loan they recommend. Other brokers get a higher fee for offering certain loans.
Sometimes, a broker will charge you a fee directly — instead of, or as well as, the lender’s commission.
If you’re not sure whether you’re getting a good deal, ask around or look online to see what other brokers charge.
Questions to ask your mortgage broker
Ask questions. Lots of them. For example:
- Do you offer loans from a range of different lenders? What sort of lenders do you work with? What kind of lenders can’t you access?
- How do you get paid for the advice you’re giving me? Does this differ between lenders?
- Why did you recommend this loan to me? Why is this loan in my best interests?
- What fees will I have to pay when taking out this loan?
- What features (options) come with this loan? Can you show me how they work?
- How do the fees and features of this loan affect how much the loan will cost me?
- Can you show me a couple more options, including one with the lowest cost?
- What is the threshold for lender’s mortgage insurance (LMI) and how can I avoid it?