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What is the Role of a Mortgage Broker?

Data from the Australian Securities and Investments Commission (ASIC) says that around half of all new home loans written in Australia are through a mortgage broker.

With borrowers worried about risks involved when it comes to home loans, it’s important to understand what mortgage brokers do exactly, why you would need one, and how to find a trusted mortgage broker when there are so many to choose from.

In this article, we’ll explain why finding a mortgage broker you can trust makes all the difference in finding the right home loan and giving you better guidance and comfort throughout your home loan application process.

Mortgage-broker-helping- couple

What Does A Mortgage Broker Do?

Mortgage brokers are home loan and mortgage advisors that help borrowers find the right finance option to purchase or refinance a property. They usually act as a bridge between a customer and a bank when applying for a home loan. 

Here’s a look into what a mortgage broker does for borrowers: 

  • Compares suitable home loan options. Mortgage brokers work by understanding a client’s financial situation first. They then help them find the most competitive and appropriate financing option to meet their property goals. From there, they can help borrowers find and compare suitable home loan products from available lenders.
  • Guides customers throughout the home loan application process. Mortgage brokers provide support to customers throughout the mortgage application process, managing it for the customers from submission until settlement, and even beyond. Mortgage brokers require you to complete a client brief and provide a range of supporting documents which then gives them a comprehensive understanding of your situation and can then discuss with you the most suitable loan products.
  • Help borrowers understand complex financial agreements and terms. It can be challenging to read through financial jargon by yourself. Mortgage brokers can help with their market knowledge and expertise. They can explain home loan terms, requirements, and other financial agreements to borrowers, so that borrowers fully understand everything they need to know about their chosen home loan option.
  • They work with banks and only earn commissions when their customers reach a settlement on their home loan. Brokers work with banks, and only get paid commissions from the bank when a home loan settles, which means their services are free to borrowers. If a customer refinances their mortgage within the first 2 years, brokers incur a clawback fee.

If you’re still hesitant to get a mortgage broker working for you, it’s worth noting that data shows the broker market share hit a record high, which points to the rising need for home loan guidance and consumer confidence in brokers.  

The majority of survey respondents also feel that working with brokers made the process faster when dealing with financial institutions as compared to going directly to lenders, as the broker handles most of the back-and-forth with the financial institution.

A trusted mortgage broker will put your best interests first. Through their years of experience and market expertise, they are in the best position to explain to borrowers all the different loan products and features available to them. For customers, knowing exactly what they can expect from the loan agreement both in the short and long-term can help mitigate the risk involved, so they can move forward with their property goals in confidence.

It’s worth noting that brokers are generally paid the same from bank to bank, which means borrowers need not worry which bank your broker suggests to go with. You can trust that your broker will suggest the best home loan option that fits your circumstances. 

Mortgage brokers walk you through the home loan process from start to finish. They provide the best deal for you, instructing not only what you can borrow but how much you should borrow too.

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The Pros and Cons of Using a Mortgage Broker

The role of a Mortgage Broker can be confusing, especially if you are a first home buyer. Experienced mortgage brokers play a crucial role in acting as the go-between for you and available lenders. 

It pays to be aware of the different pros and cons of working with mortgage brokers. It’s important to understand whether they have the right expertise to provide you with mortgage advice you can trust, to guide you in making crucial decisions.

The Pros: 

  • Mortgage brokers make the loan application process easy. Most people who want to buy property may find themselves at a loss with where to start. With so many home loan products available in the market, it can be hard to know which ones you qualify for while also achieving a great rate! Mortgage brokers can help explain all the intricacies of buying a property and getting a loan, especially if you aren’t too confident to work through the application process yourself. They will handle the majority of correspondence with the lender so that you don’t have to.
  • Mortgage brokers can offer customers a better range of loan products. Due to working with different lenders, mortgage brokers can provide you with a wide range of loan products to choose from, so you can find one that best suits your financial situation. Working with a mortgage brokerage like Shore Financial means you get access to competitive rates and appropriate products, so you pay the least amount of interest possible for your unique situation.
  • Mortgage brokers offer services at no cost to borrowers. Mortgage brokers generally do not charge you a fee for their service, but instead earn commissions on finance they assist in arranging from the bank. They mostly get paid the same per bank, so you don’t have to worry about your broker offering you biased home loan products. Mortgage brokers will recommend home loan products that are aligned with your unique situation.
  • Mortgage brokers can find you home loan options with better rates.
    Mortgage brokers have relationships with different lenders and banks, which means you may get offered different rates to what you may find online. Choosing a mortgage broker who has built a reputation of trust among different lenders and banks around Australia ensures you get the full range of home loan product options that can offer you the best value.
  • Mortgage brokers have the market knowledge and industry expertise to help you make good investment decisions. All home loans come with a degree of risk involved when it comes to costs and timings. Reliable mortgage brokers provide experience and industry knowledge, giving you an expert’s reassurance that you are making the right financial decision. 

The Cons: 

  • Not all mortgage brokers have the right industry experience. When it comes to choosing the right mortgage broker, the right qualifications and industry experience often have big roles to play. It’s best to look for a mortgage broker with the right experience and volume to recommend a wide range of mortgage products that are tailored to your needs.
    It’s absolutely critical to do your research into accredited brokers beforehand, so you can choose the best and most trusted mortgage broker, one that is 100% committed to understanding your needs and gives you all the support you’ll need from application to settlement, and even beyond.
    A lot of mortgage brokers are new startups that have not been around that long. They lack the experience and volume that more established firms have. You’ll need to find a brokerage with a long history of delivering value for clients, where experience and lender partnerships are concerned.
  • Not all mortgage brokers are backed by a qualified support team. Choosing the right firm matters. When your mortgage broker is backed by a highly educated team with combined years of experience, you get access to advanced knowledge, depth, and quality advice that ensures you get the best solution with faster loan approvals. As compared to award-winning mortgage brokers or banks, not all mortgage brokers have access to back office support like Shore Financial’s brokers do.

Here’s a quick summary of the pros and cons of using a mortgage broker when you’re looking to purchase property for the first time or invest in more.

 

Why Choose Shore Financial

We understand how important it is for you to find a mortgage broker you can trust that can walk you through the loan process from start to finish and help you achieve your property goals if you’re planning to buy a home. 

Shore Financial cares about you and your property goals. But more than just finding the best loans, our brokers work with so you get it on your terms, ensuring you get the most competitive rates when it comes to buying or refinancing property. 

We give each client our Sleep Soundly Review™ promise — a commitment to our clients that they’ll receive a yearly review to make sure their loan is still the best fit and carries the best rate possible for them. 

Shore Financial’s team of 30 brokers has extensive wealth knowledge and experience to manage complex phases, with $1B settlements per year. Our brokers have access to back-office support with the most qualified and skilled specialists in the market, giving you a smoother, stress-free experience, so you are better positioned to achieve your property goals faster. 

Shore Financial stands out among all other mortgage brokers as the #1 trusted partner that real estate agents are most likely to recommend in Australia. It has been awarded the best, large independent mortgage broker, which means you can trust that you’re working with a broker that has the scale, strength, and experience to fight for the best deal for you. 

Speak to one of our mortgage brokers and let our team help you find the best path to start building your wealth through property.

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