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How Mortgage Brokers Work.
People use a mortgage broker to get access to a greater range of home loan options, better service and for the abilites of a mortgage broker to be able to negotiate with lenders for a better home loan deal for your financial situation.
Mortgage Brokers offer home loans from a panel of financial institutions, including banks and non-banks.
In Australia now, there are literally hundreds of lenders with many more options. Using a professional broker is now an essential part of searching the market for the right home loan. In simple terms they evaluate your finances to find you the best home loan that will provide for and improve your financial position in life..
A great advantage of using a good broker is that they have access to many of the lenders and their home loan products thus giving you a greater variety to choose from.
Panel of Lenders
Brokers can only offer loans from the lenders they are accredited with. They call this their panel of lenders. Lenders will normally range from the large banks through to specialist non-bank lenders and mortgage managers. The size of a panel of lenders will vary from broker to broker. You can ask to view your broker’s panel.
How Brokers are Paid
Residential brokers are remunerated by the lender and receive an upfront commission and a trailing commission on the loans they settle. It is not standard industry practice for a residential broker to charge a customer for their service due to this arrangement.
The normal practice for commercial, equipment and general finance brokers is that they enter into a mandate or agreement with the commercial or business borrower which provides for a fee to be paid by the borrower to the broker for sourcing their required finance.
Why Use an MFAA Member
MFAA members must adhere to the industry Code of Practice which required high professional standards, fair business practices, ethical behaviour and compliance with both the letter and the spirit of the relevant laws and regulations – all in the interest of you, the borrower.
Legal Requirements for Brokers
There is currently no national regulation for brokers. However, some state laws and regulations exist, such as:
* Brokers are required to hold a licence in Western Australia
* Brokers are required to be registered in the ACT
* A finance broking contract (FBC) has to be signed in NSW and Victoria between the broker and the borrower before the broker can approach the lender on your behalf. The FBC ensures brokers fully disclose all details of the loan transaction, including any monetary or non-monetary benefits they receive. The MFAA asks its members to adopt this process in all