Why would you choose a Mortgage Broker?

Ideally a broker offers you industry experience, access to a broad range of lenders and often access to lenders and products not available to the general public.

If you choose a broker you are also gaining the benefit of their existing relationships within the lending bodies. This can be a definite advantage, particularly in dealing with a large corporate entity.

Another very obvious advantage in using a broker is the amount of time you can save. A good broker, as noted above, should have access to a wide range of lenders. Because of this, you are able to access information about all of these potential loan products by speaking with just one person, rather than having to meet with each and every lender.

There are of course risks involved in choosing a broker as the current affairs programs are quick to tell us. However there are certain things to look for that will help protect you.

Firstly check that your broker is a member of either Mortgage Industry Association of Australia (MIAA) or the Finance Brokers Association (FBA) and due to recent changes in the laws they will also need to be a member of an independent ombudsman scheme such as Credit Ombudsman Service Limited (COSL).

This will show they are governed by a code of practice and that a breach of industry standards can be pursued through an independent disciplinary body should the broker fail to address the issue to the clients satisfaction. Bearing in mind that it is always best to try to have the matter dealt with by the broker if possible but if they are unwilling to look at your concerns it does give you further recourse.

A smaller but no less important point is the relationship you have with your broker. Make sure that before you commit to their service you have a talk with them. They will need to ask you quite a lot of questions about your past, present and future financial details and plans. Are you going to feel comfortable with them enough to give them these details and trust in their advice?

Remember to do your homework, while using a broker is partially to save you time you also need to know the basics. The broker should give you a lot of information about your options they may not remember everything or even realise there may not be things you don't already know.

Do not be afraid to ask questions, there is no such thing as a "silly" question. Often people get into difficulty simply because that question they thought was silly, was really something they should have asked. Don't worry, if the broker does not know they will happily find out.

It is also important to note, that within NSW it is frowned upon, especially by the main lenders, for a broker to charge a brokerage fee for a residential loan. They are paid both an upfront commission and an ongoing trail for the successful loan by the lender, and as such it should be unnecessary for them to charge any additional fee.

In the end choosing a broker comes down to personality and access. Do they have access to the lenders and the products that will best serve your needs and do you feel comfortable that they are going to take your needs seriously doing their best to find a product that will suit your needs as closely as possible?