Mortgage brokers
What does a mortgage broker do?
A mortgage broker can help you find out about different home loans available in the marketplace and may be able to arrange special deals. A mortgage broker may also be able to assist people who might otherwise find it difficult to borrow money, for example, if you have had problems repaying a debt in the past. However, you may pay a higher interest rate if you have a bad credit history.
It is useful to note the following information and tips when using mortgage brokers.
- Do your own research about the type of home loan that suits your circumstances. Shop around for loans by doing some research, for example on the internet, check magazines, talk to family and friends and set your own financial limits.
- Contact two or three mortgage brokers by phone or over the internet and find out what they can offer. Some brokers may offer a limited range of loans. Ask the broker to provide you in writing with a list of the lenders whose products he/she promotes or considers on behalf of clients. You can find out if a mortgage broker is licensed by contacting Consumer Protection on 1300 30 40 54.
- Check if the mortgage broker will charge you a fee for their service. Generally, mortgage brokers do not charge you to look for a home loan, but do not assume that this is the case. Mortgage brokers are usually paid by lenders. The maximum fees that a mortgage broker can charge you for their services are regulated by the Finance Brokers Control Act 1975.
- Find out in writing if the mortgage broker receives a commission or other benefits, (such as profit sharing) from the lender for negotiating or managing the loan. Brokers are sometimes paid for the length of time the loan remains with the lender.
- A mortgage broker should act in your best interest. By law, the broker must tell you if they have any involvement in the transaction, other than as your agent, or if they know anybody else who is involved in the transaction, for example employees of the broker or members of the broker’s family. Consider whether these associations might affect the broker’s ability to act in your best interest.
- A mortgage broker should carry out all relevant instructions. Instruct the broker in writing to find you a loan that best suits your circumstances and ask the broker to explain in writing how they make any recommendations.