With seven consecutive months of rate rises, many mortgage holders are probably reassessing their finances and may be looking to change their loan.

This is by no means an easy task; according to one comparison website, there are 5400+ loans available.

While having choices at your fingertips gives more opportunities, inputting your details, reading all the small print, knowing what is right for you, and what all the T&Cs can be overwhelming. Our recent blog explains why many borrowers like to work with mortgage broker.

So how do you find a mortgage broker that’s right for you?

While there are online reviews, and financial influencers on social media, many people turn to the people they know — family, friends, spouses, colleagues — rather than trust unknown reviewers or personalities online.

Brokers often rely on word-of-mouth networks, so will go the extra mile to make sure their customers are satisfied.

However, even if a broker is highly recommended, it’s always worth knowing what to look for in a broker; you shouldn’t always go with a broker, just because your colleague says so.

Like any service provider, even if they come highly recommended, you need to have the assurance they are working in your best interest.

Here are some of our tips to finding a good mortgage broker

Know your loans

Before you contact a broker, do a bit of research. Know roughly what type of loan you’re looking for (eg variable or fixed rates), and use some of the online comparison sites so you know approximately what deals you can get and what your repayments could be.

Then ask your broker if they can do better!

Are they qualified and licensed?

A good broker should have their own Australian Credit Licence or be qualified to act as an authorised credit representative; mortgage brokers need to have a Certificate IV in Finance and Mortgage Broking before they start working.

The Mortgage & Finance Association of Australia (MFAA), the peak national body for professional mortgage and finance brokers, mortgage managers and aggregators also has ‘find a MFAA accredited broker’ function on its website.

The Australian Securities and Investments Commission says Australians should always check the broker or the company they are dealing with is licensed – search ASIC Connect’s Professional Registers to ensure your provider is legitimate.

How are they paid?

Brokers generally are on commission, and legally they have to tell you what commission they are on and how it is paid.

There are two types of commission:

• Commission upfront

This is a percentage of the total value of the loan; the larger the loan, the greater the broker’s commission. Be mindful of a broker recommending a larger loan than you’ve budgeted for and ask them to explain their reasons.

• Trail commission

In this type of commission, brokers continue to receive over the life of the loan. This means you may want to keep checking in with them to check you’re still on the best deal.

Lending panel

A good broker should have access to a wide range of lenders and should easily be able to tell you who they are working with. This is known as their lending panel.

Ask your broker for the top 10 banks they send loans to and what percentage of loans they send their way. This should tell you if they actually are scanning market.

And it may also give an indication as to who actually ‘owns’ them. For instance, in December 2020 Commonwealth Bank of Australia entered into an agreement to merge Aussie Home Loans with Lendi, a leading online home loan platform.

A good broker won’t be influenced by their ownership structure and will recommend a wide range of loans from across the market.

Explain your options

As well as presenting you with a number of options, a good broker will explain the pros and cons with each loan, and highlight the risks and benefits.

They shouldn’t pressure you into making a decision and they will explain the small print.

Legal requirements

A broker must follow responsible lending laws and shouldn’t sell you into an inappropriate or risky loan. When making a credit assessment, a broker will note your income and expenses, along with your financial objectives and expectations. You can request a copy of your credit assessment, so you can check the details are correct.

Brokers must also provide you with a credit guide. This provides the broker’s contact details and a record of the commission the broker will get if you go ahead with the loan. It should include details of who to contact if you have complaint with the broker.

We also suggest you check out two to three different brokers; You want to find a broker who you are comfortable with, and be confident they understand the industry, know their products and listen to you.

Our aim is to give you information to help you make informed choices. We’re always here for an informal chat to answer questions, so give us a ring on 02 4954 9777, send us an email to mail@apnewcastle.com.au or pop into our Cardiff office.