A good mortgage advisor can help you find the right mortgage and apply for it on your behalf. Learn about commissions and how they work
In the following article:
What is a mortgage broker?
Why should you use a mortgage broker?
How do you choose a mortgage broker?
Commission and broker fees
Questions to ask a mortgage broker
Mortgage broker jargon-buster
What should you look for in a mortgage deal?
Your rights as a mortgage broker
What is a mortgage broker?
A mortgage broker or adviser is someone who reviews the available mortgages based on your financial situation and applies for one on your behalf
They will save you time and help you improve your application
Why should you use a mortgage broker?
A broker can help you save time and stress by helping you to find the right deal and communicate with the lender
Mortgage brokers are experts in the mortgage market. They should have software that allows them to search for mortgage deals faster than you can
A good broker can help you identify the lenders most likely to take you on and steer you away from applying for deals that you are unlikely to get.
You have the right to appeal to a broker if the mortgage isn’t suitable for you. This option is not available to applicants who apply without seeking advice
How do you choose a mortgage broker?
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Search for a whole-of-market broker
You should think about a few things when selecting a mortgage advisor.
Mortgage brokers and mortgage advisors may only recommend mortgages from a limited number of lenders
While you are talking to an advisor based at a bank, building society, or other financial institution, they will only talk about their product range
A whole market broker can assess all mortgages and recommend the best deal.
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Ask about direct-only mortgages
Many mortgages can only be obtained through brokers.
Brokers are not required to tell you about these deals.
If your broker refuses to talk about direct-only deals, you may want to do your own research
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Choose the type of broker you want
Mortgage brokers typically work with clients in person or by phone. However, there are now many ‘robo-matrix advisers’ that allow you to complete some or all the mortgage application process online
Mortgage broker fees and commission
Mortgage brokers are often paid commissions by lenders for arranging mortgages.
Other lenders will charge you a fee. It could be either a flat rate or a percentage of what you borrow
Before entering into a mortgage broker contract, all lenders must clearly disclose the charges and commissions they receive
Questions to ask a mortgage broker
- Are your products whole-of-market
- Can you tell me more about mortgages available only through lenders?
- What fees and charges do you charge?
- What are the services you offer? Will you take care of all the chase and admin lenders?
- What hours are you available? Are they office hours or evenings or weekends
- Do your offer mortgage protection insurance or life insurance.
Mortgage broker jargon-buster
A good mortgage broker will explain everything you don’t get, but it is still useful to have a basic understanding of the terms most commonly used
AIP: is a document from a lender that confirms, in principle, the amount they are willing to lend you
ERCs: Penalties you would have to pay if your mortgage agreement is terminated before a specific point.
Standard Variable Rate (SVR): What your lender will charge you after your initial mortgage deal period ends
Leasehold and Freehold: These are the two forms of property ownership. These terms are only a small selection of those you might encounter.
What should you look for in a mortgage deal?
A broker can help you understand the pros and cons of each deal once they have found you a variety of mortgages
Consider before you decide which one to apply
- Whether you are looking for a fixed rate, discounted, tracking mortgage
- The cost of mortgage fees
- Whether a mortgage offers cash back or other incentives
- The reputation and customer service of the lender
Check out our guide to finding the best mortgage deals to learn more. To find out if the provider is good, check out our mortgage lender review.
What are your rights as a mortgage broker?
Always verify that your broker has the authority to provide mortgage advice. Refer to the Financial Services Register
Before you apply for a mortgage, you should follow these steps
- Take a look at your situation
- explains the different types and deals of mortgages available
- will advise you which ones meet your needs
- will give you clear, convincing reasons for recommending a particular deal
You can file a formal complaint if you feel you have received poor advice
First, contact the company that advised you to find out if they can help.