Money Calculators 
Masterclass 
Podcast 
You followed a lean budget, worked hard, saved smart, and waited for years to arrive at this point in your life:
Buying your dream home.
Now that you’re ready for the next big step, it suddenly dawns on you that purchasing a home is one of the most daunting tasks you’ll do as an adult.
You want to get it right the first time, while also getting the right house without overpaying.
Jump straight to…
To save yourself from the difficult, frustrating, and time-consuming process of trying to find the best home loan, you decided to engage the services of a mortgage broker.
So now you ask:
How do you choose a mortgage broker?
To find the right mortgage broker for you, consider making a list of qualities your prospective mortgage brokers have to meet.
In this article, we’ll look at ways to help you choose a mortgage broker that’s right for you.
Tips for Choosing a Mortgage Broker
When it comes to buying a home or refinancing a home loan, a mortgage broker is an invaluable member of your team.
They can:
- Guide you through the home loan market’s twists and turns
- Find the best interest rates for your situation
- Ensure the home loan application process runs smoothly.
Choosing a mortgage broker is a challenging task. You’re probably wondering how you’ll find a broker who’s trustworthy, knowledgeable, and easy to work with.
If you’re ready to start looking for a home or refinance your current home loan, you can start your search for a good mortgage broker through:
- a mortgage broker professional association
- recommendations from people you know
- An MMS Money Buddy
Mortgage Broker Professional Association
The professional bodies for the Mortgage Broking Industry are the Mortgage and Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA).
Before major lenders work with a broker, they need to be a member of an association. You can go to the website of either association to look for a broker in your area.
Recommendations from People you Know
We all know somebody who has worked with a broker. And if they worked with a good broker, they’d probably be keen to talk about it.
It won’t hurt to ask family, friends, or coworkers if they know a good broker in the area.
My Money Sorted is a digital finance platform for expert money tips, tailored insights and helpful tools to get your money sorted.
With My Money Sorted (MMS), you get to choose from the best home loan options in the market. Get the right options for your needs in under 5 minutes, or call on MMS finance experts to help you secure the best deal possible.
When you book a call with My Money Sorted, you get paired with the right financial expert for your situation.
Book a Call Today to get a step closer to your ideal mortgage broker.
Should I compare mortgage brokers?
A home loan is a significant long-term financial commitment, so it stands to reason that you would want to get the best deal possible.
If you go through a mortgage broker, it may be worthwhile to speak to a few brokers to see what’s on offer and compare fees.
You can look into mortgage brokers and even meet with a few of them to:
- Get a sense of the size of their lender panel (list of banks and lenders)
- Ask how their commissions are set up
- Check whether a major bank or other lenders wholly own them.
A lender panel is a mortgage brokers list of approved lenders from whom they can access loan products on your behalf.
Now, even if you shop around and compare different brokers to find the one you like best, it is still a good idea to do your own research into the type of home loans you want and check if your broker’s recommendations match.
The Makings of a Good Broker: What Should I Look for in a Mortgage Broker?
A mortgage broker is more than a third party who helps potential home buyers secure a loan to buy a home. A mortgage broker works for you to get you the best possible loan and interest rate.
To find a broker who’s trustworthy, knowledgeable, and easy to work with, it would help to consider the qualifications and qualities of a good mortgage broker.
What Are the Qualifications of a Good Mortgage Broker?
Before engaging brokers, you have to ensure that they’re licenced, insured, experienced, know many lenders and are knowledgeable in the business.
1
Licenced Mortgage Broker
First of all, make sure that your broker is legally allowed to help you through the home loan process.
We mentioned earlier that a broker must be a member of either the MFAA or the FBAA, the two professional bodies for mortgage brokers in Australia.
Additionally, your broker should have an active Australian Credit Licence (ACL) from ASIC or be an authorised credit representative of an ACL holder.
The Australian Securities and Investments Commission’s Regulatory Guide 206 says that mortgage brokers in Australia must be at least accredited under the National Consumer Protection Act and have a Certificate IV in Finance and Mortgage Broking (ASIC RG 206).
But it’s even better if your broker has more credentials, like a Diploma in Mortgage Management or a related degree in economics or finance.
2
Insured Mortgage Broker
MFAA and FBAA brokers must have Professional Indemnity (PI) Insurance of at least $2 million per claim and $2 million in total.
Professional Indemnity Insurance protects Mortgage Brokers financially against losses caused by carelessness, mistakes, and omissions in the way they do their jobs.
The insurance will help pay for both the legal fees needed to defend a claim and any damages that need to be paid.
3
Experienced Mortgage Broker
Your home is one of the most expensive things you’ll ever buy, and because of this, it’s important to work through this financial decision to someone who has a history of helping people like you.
A good broker has a lot of experience on top of their qualifications.
They have worked with people like you before, so they know how to match your financial situation with a bank’s lending criteria and get what you need with a particular lender.
Their experience will help you get the best home loan interest rate on the market, whether from banks or specialist lenders, and help you all the way through the application process.
4
Knowledgeable Mortgage Broker
Federal and State governments often come up with new stimulus measures and grants to help Australian borrowers and investors.
If your broker keeps you up to date on these, you’ll be in the best position to take advantage of any new schemes that become available.
For example, grants like the First Home Loan Deposit Scheme (FHLDS) have a limited number of spots and are given out based on eligibility and who applies first.
If you don’t know about these changes as soon as they come out, you might miss out on important help with your purchase.
5
Sizable Lender Panel
The number of loan options you have can depend on how many lenders your broker works with.
A lender panel, aka broker’s panel, is a list of banks and lenders that brokers can access.
A good broker will have a wide variety of lenders on their panel and will frequently draw from the full range, depending on the borrower’s financial position.
A sizable panel would have access to 30 or more lenders, each with their own set of interest rates, home loan products, and lending criteria and credit assessment.
The best mortgage broker will offer you suitable loan options from different lenders and financial institutions.
What Are the Qualities of a Good Mortgage Broker?
Beyond qualifications, you may also want to consider the qualities of a good mortgage broker too.
You’ll get hints if a mortgage broker works in your best interest if they ask good questions, are clear with fees, keep you updated, have happy clients, and communicate clearly.
If they do, they’ll likely go above and beyond to get you the best deal.
Asks Good Questions
The first meeting is a discovery or fact-finding session, during which the broker must appreciate and fully understand your goals and objectives.
This information will help them find the best home loan product for your specific needs and put you in the best position to have your application approved and your loan serviced.
If your broker does not ask good questions before recommending a product, in certain cases you may:
- pay more in interest
- get stuck with the wrong home loan product
- experience delays with your application, or
- have your application rejected
Clear and Upfront with Fees
Before you commit to your home loan, be aware of and plan for a number of hidden costs. Here are some examples:
- Lender’s Mortgage Insurance (LMI)
- Stamp Duty
- Lender Fees
- Legal Fees
- Loan Application Fee
Since all of these expenses can quickly pile up, your broker should be upfront with you about what you can anticipate paying and when.
Furthermore, a good broker will be able to tell you if you are eligible for any government grants, which could help you save thousands of dollars.
Finally, keep in mind that mortgage brokers are typically paid by the lenders or banks in the form of a referral fee, rather than being paid by the borrower.
This means that, in most cases, you need not pay a broker’s fee — and if you do, the fees should be clear and upfront with you from the start.
Keeps You Updated
The home loan market is always changing. Interest rates change, house prices go up and down, and lenders are always coming up with new ways to attract borrowers like you.
An experienced broker keeps up with these changes and lets you know about the most important ones.
Have Happy Clients and References
A good mortgage broker has a long list of satisfied clients.
This is a sure sign that they’ve helped other borrowers realise their dream of owning a home and are likely to be able to do the same for you.
Check out their website and social media to see what other customers have said about them. If none of these are available, make sure to ask for references before working with any broker.
Communicate Clearly and Often
The last thing you want to do is send in your mortgage application and then have to keep calling your broker to find out what’s going on.
Keep track of how your broker communicates with you from the first time you contact them.
Do they answer your questions quickly and thoroughly?
Do they keep you informed of developments as soon as they happen, or do you follow up with them for more details?
A good broker always does what they say they’ll do, keep you updated on the next steps, and let you know how your application is doing.
What Questions Should I Ask a Mortgage Broker?
Screening mortgage brokers takes time, but it’s worth it if you find the right broker for you. So, before you meet your first broker, let’s go through some questions you would want to ask them.
How Do Mortgage Brokers Get Paid?
Most mortgage brokers receive commissions from banks for arranging loans rather than charging you.
There are 2 Types of Commissions:
1. Upfront commission
A certain percentage of the total value of the loan, which means the bigger the loan, the more the broker makes. So be careful if a broker suggests a bigger loan than you can afford.
2. Trail commission
A percentage of the mortgage that brokers continue to receive over the life of the loan.
Are Mortgage Firms Owned By or Associated With a Big Bank?
It’s best to ask your broker who the owners are because there are major banks that own or have a stake in mortgage broking businesses.
The ownership of these businesses can affect the quality of advice and encourage brokers to recommend loans that go right back to the bank that owns the brokerage.
A good broker won’t be affected by how they are owned and will suggest loans from across the market.
How Many Lenders Do Mortgage Brokers Deal With?
Most brokers work with a panel of lenders, and it’s likely that these lenders will have different types of home loans.
There’s no hard and fast rule about how big a panel should be, but a broker who works with a dozen or more lenders is likely to have more options for you than a broker who only works with a small number of lenders.
However, even if a broker has a large panel, they may still prefer a small number of banks.
It can be helpful to ask mortgage brokers where they usually send their business and how much of their business goes to each particular lender.
What is the Credit Assessment and Credit Guide?
The National Credit Act legally requires brokers to conduct a credit assessment and give their clients a credit guide. If they do not perform either, then that’s a red flag.
Brokers must perform a credit assessment to ensure that they do not sell you a risky loan.
They look at your income, expenses, and personal goals. All these are written down in a document called a credit assessment.
Ask your broker for a copy, because they don’t have to give it to you unless you ask.
It’s important to make sure that this paper matches what you told your broker, otherwise the broker may get away with selling you a loan you can’t afford.
The credit guide is a legal document the broker must provide.
It records the broker’s contact details and the commission they will earn if you proceed with the loan. It should also include instructions on how to complain about the broker.
Don’t throw away this paperwork; you never know when you might need them.
What’s the Best Interests Duty?
- The best interests duty is a law that came into effect in Australia on 1 January 2021.
It states that mortgage brokers must look out for your best interests when helping you get a loan approval.
This means that your broker should and will do the following:
- Put your best interests ahead of their own
- Provide you home loan options and explain their pros and cons
- Make loan advice based on your needs, goals, and circumstances
- Not recommend a related party’s product or service to boost their revenue.
The best interest duty only applies to mortgage brokers, not to banks or other types of lenders. So, unlike when you go to a bank or lender directly, your broker is legally required to look out for your best interests.
If you need help looking for a mortgage broker that looks after your best interest, talk to My Money Sorted for free!
Many people may be unaware of this…but just like you, 41% of Aussies intend to get financial advice rather than going it alone, according to an Australian Securities and Investments Commission (ASIC) report.
Find the right Mortgage Broker for you with the help of My Money Sorted.
When you book a call with My Money Sorted, you’ll:
✓ get a better understanding of your home loan options
✓ have an idea of the experts you can call on to help you reach your goals
✓ be matched with a mortgage broker who can help develop the best home loan strategy for your situation
My Money Sorted is your stress-free pathway to getting ahead with your home loan.
Here’s what your journey will look like:
Step 1: Start off with a quick money matters session with My Money Sorted
Step 2: Get matched with a licensed Mortgage Broker that’s right for your money situation
Step 3: Take the first step towards your money goals with a clear and sound roadmap prepared by an experienced Mortgage Broker
It’s that easy!
Looking for the Right Mortgage Broker? Chat with My Money Sorted to Learn How to Find the Right Financial Advice.
