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More than half of all home loans in Australia are now arranged by a mortgage broker. But how does mortgage broking work and why is using a mortgage broker so popular?
Whether you are negotiating your home loan or refinancing, mortgage brokers have become an increasingly common tool that buyers turn to when looking to secure a home loan.
ASIC’s review of mortgage broker remuneration found that in 2015 most borrowers are using mortgage brokers (54%).1
The report found that of those people who used a broker or planned to use a broker, the majority (58%) felt the broker could get them a better deal than going direct to a lender.
But what does a mortgage broker actually do for you and why are so many people turning to mortgage brokers to help them with their home loan?
A mortgage broker’s role is to help you obtain a home loan or mortgage.
The broker acts as an intermediary, negotiating between you and lenders such as banks, building societies, credit unions, or other credit providers including online only lenders.
Based on your needs, the broker should spend time finding loans suitable for your financial situation, then arranging the loan paperwork, and providing support during the application and settlement process.
What this means is you could avoid the hassle of shopping around for a better deal as a broker can search the market and present a shortlist of loans to choose from.
Your needs as a borrower will naturally be different depending on your stage of life and your purpose for the loan, such as if you are refinancing to add an extension or get a lower rate, looking for a new mortgage entirely, or buying an investment property.
A broker should be able to help you choose between the loan options and types available to you.
There are several cases where having a mortgage broker could significantly reduce the time and hassle involved in choosing a home loan:
In general, whether or not a mortgage broker would be useful will depend on your goals and needs.
See more in the video below
Source: QInvest Limited (ABN 35 063 511 580, AFSL and Australian Credit Licence Number 238274)How are mortgage brokers paid?
ASIC’s review of mortgage broker remuneration showed mortgage brokers are most commonly paid by a commission on loans settled (paid by the lender), but they can also be paid with a fee for service (paid by the borrower), or a salary (paid by their employer).
Read our other guides to check what else to think about when using a mortgage broker.
1 ASIC; Report 516 Review of mortgage broker remuneration, March 2017, http://asic.gov.au/regulatory-resources/find-a-document/reports/rep-516-review-of-mortgage-broker-remuneration.
2 QInvest Limited (ABN 35 063 511 580, AFSL and Australian Credit Licence Number 238274) (QInvest) is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trustee for the QSuper Fund (ABN 60 905 115 063). QInvest is responsible for the financial services and credit services it provides. The credit services advertised are provided by QInvest Limited. QSuper doesn’t receive any direct payments or commissions from QInvest Limited as a result of members using the LoanFinder service. You should make your own decision about how suitable this service is for your individual needs.
3 The rebate is calculated on the amount of ongoing commission (excluding GST) payable by the lender to QInvest. For some lenders, the rebate applies from year two and isn’t available to GST registered borrowers.
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