A mortgage broker helps you compare and apply for home loans from the lenders they can access. The broker arranges the loan but does not lend the money.
In Australia, a broker must hold a credit licence or work as a representative of a licensee. Before appointing one, check their authority and ask which lenders they can compare.
What a Mortgage Broker Does
A broker collects information about your finances and goals, compares available loans and helps manage the application through to settlement. Ask who handles documents and lender follow-up during the mortgage application process.
A bank loan writer usually offers that bank’s products. A broker can compare several lenders, but may not have access to every lender or loan. Our broker or bank comparison explains how those choices differ for borrowers.
How Brokers Work Day to Day
A broker uses your circumstances to narrow the available loans to a shortlist. Ask to see the options considered and why the recommended loan fits your needs.
Ask which aggregator the broker uses and how many lenders that arrangement gives them access to. An aggregator provides access to a panel of lenders. The broker’s own access can also depend on their lender accreditations.
The Australian Securities and Investments Commission (ASIC) recommends asking which lenders a broker can and cannot access. Its Moneysmart broker guide also suggests asking whether their pay differs between lenders. Ask whether any shortlisted lender pays more.
What a Broker Can and Cannot Promise
A broker can help you apply and manage the process through to settlement. A broker must act in your best interests when suggesting a loan.
A broker’s lender panel is not the whole market. A promise of a lower interest rate does not establish that the recommended loan costs less overall. Compare fees and features alongside the rate, and ask why each option made the shortlist.
For example, a borrower who keeps savings in an offset account needs to compare the benefit against the loan’s fees. The lowest advertised rate alone does not settle that comparison.
A high broker share of home lending does not authorise an individual broker to give financial advice about investments or superannuation. That requires separate authority. ASIC’s financial advisers register lists the products a financial adviser can advise on.
How Mortgage Brokers Are Paid
ASIC describes lender commission as typically having an upfront payment and an ongoing payment. Upfront commission follows settlement. Ongoing payments are commonly called trail commissions.
A broker who charges you directly must give you a written fee quote. You must sign it before they provide the quoted services, and they cannot request payment before providing those services.
Ask how each shortlisted lender pays the broker and whether one pays more than another. A broker who charges no direct fee can still receive lender commission. Our guide to how mortgage brokers are paid explains the payment structure in more detail.
Checks Before You Appoint a Broker
- Search ASIC’s Professional Registers Search for the broker’s credit licence or credit representative number. Check that the record matches the person or business you are meeting.
- Ask which aggregator they use and which lenders they cannot access.
- Ask how they are paid, including any direct fee and differences in lender commission.
- Ask them to explain two loan options and why the preferred one is in your best interests.
Meet more than one broker, especially if the first conversation leaves lender access or pay unclear. Use the full list of questions to ask a mortgage broker to prepare for the meeting.
Technology and the Housing Market
Comparison software or an aggregator portal helps a broker organise loan options. It does not change the broker’s duty to explain why the recommended loan is in your best interests.
The usable options still depend on the broker’s panel and your circumstances. Ask for the comparison and the explanation, whichever software the broker uses.
Your First Steps With a Broker
Complete the ASIC register check before appointing a broker. Take the four checks above into your first meeting, then keep the details of the recommended loan and the broker’s explanation. Keep any signed fee quote with those records.
