What does a mortgage broker actually do?

We start by understanding your circumstances

Before recommending a loan, a broker needs to understand your situation.

This usually includes:

• what you want to achieve;
• your income;
• expenses;
• existing debts;
• deposit or equity;
• employment position;
• property plans;
• preferences and priorities.

The aim is to understand what matters to you before looking at lending options.

We assess borrowing options

Different lenders have different policies, pricing and assessment methods.

A broker can compare options across the lenders available to them and consider factors such as:

• borrowing capacity;
• interest rates;
• fees;
• loan features;
• lender policy;
• loan-to-value ratio;
• property type;
• employment or income structure.

The lowest advertised rate is not always the most suitable option. Whether you are looking at home loans, refinancing, a first home purchase or an investment loan, the process is much the same.

We explain the options

Part of a broker's role is to explain the differences between suitable lending options in a way that makes sense.

This can include:

• fixed versus variable rates;
• principal and interest versus interest only;
• offset accounts;
• redraw;
• fees;
• repayment structures;
• loan terms.

You should understand why an option is being considered before you proceed.

We help prepare the application

Once you decide to proceed, the broker helps gather the information and documents required for the application.

This may include:

• identification;
• income evidence;
• bank statements;
• details of existing liabilities;
• property information;
• supporting financial documents.

The broker then prepares and submits the application to the lender.

We deal with the lender during the process

After lodgement, the broker remains involved.

This can include:

• responding to lender questions;
• arranging additional documents;
• discussing valuation requirements;
• monitoring application progress;
• explaining conditions;
• helping coordinate the path to approval and settlement.

We stay involved beyond settlement

A good broker relationship does not necessarily end when the loan settles.

Over time, your circumstances and lending products can change.

A broker can help review your loan when:

• interest rates change;
• your fixed rate expires;
• you want to refinance;
• you plan another property purchase;
• your financial circumstances change.

How mortgage brokers are paid

In many residential lending situations, the lender pays the broker a commission when a loan settles and may also pay an ongoing trail commission.

The way a broker is paid should be disclosed as part of the credit assistance process.

Some circumstances or types of finance may also involve fees charged to the client. Any applicable fees should be explained before you proceed.

A broker still has obligations to you

Mortgage brokers operating under Australian consumer credit laws have obligations when providing credit assistance.

For regulated credit, these include requirements designed to ensure recommendations are appropriate to the consumer's circumstances.

Mortgage brokers also have a Best Interests Duty when providing credit assistance to consumers in relation to certain credit contracts.