Need help to narrow down a your home loan options? Speak to a licensed mortgage broker.
A mortgage broker is a professional who helps borrowers find home loans by sorting through the hundreds of loans available in the market today. They're usually free to you as they earn a commission from the lender you choose to go with, and they are able to help you find a loan even if you have some special circumstances, including if you are self-employed, credit impaired or receiving an income from the government in the form of a pension.
Read on for a comparison of mortgage brokers and an explanation of how they work.
Compare mortgage brokers in the table below
How the table above works
- The table above shows some mortgage brokers you may want to enquire with.
- Click 'Enquire' to read more about the broker and fill in a form to lodge an enquiry
- You should receive a call back within a business day.
- Enquiries are obligation-free and won't be recorded on your credit file
A mortgage broker is a professional who compares and helps you apply for home loans on your behalf. A good mortgage broker will give you personalised service all the way through to settlement.
Many brokers are happy to work around your schedule, and will organise meetings after hours in your home. Plus most mortgage brokers will not charge you for their services — they are paid by the lender. While a mortgage broker does not work directly for banks or financial institutions, they do work with them to provide you with a wide selection of choices.
Brokers can also be tremendously helpful if you have a poor credit history, because while your options may be limited when you approach a single lender, the wide array of choices offered by a mortgage broker may be able to help you find a solution.
How can I benefit from a mortgage broker?
A mortgage broker can offer a range of home buying and home loan services which can help make the transition from renting to buying, or the transition between properties smoother and easier on your time. However mortgage brokers services are not for everyone and if you prefer to be in control of your choices and have access to the full range of Australian home loans on offer you may prefer to go direct. You can benefit by making your own comparisons by going directly to the bank because:
- A mortgage broker is a middleman. A mortgage broker will liaise between you and the lender during the entire application process, so you are unlikely to even meet a lender representative because the paperwork can be processed through your mortgage broker. This means that you may not get a chance to find out about the sort of service you will receive from your lender, or get to know your bank manager if you need to ask a question or find out more.
- A mortgage broker submits the loan on your behalf. A mortgage broker will provide you with a range of loan options, and will then complete the paperwork on your behalf and submit that paperwork to your lender. This means you have less involvement in the application process.
- A mortgage broker means you don't spend time comparing loans. This can benefit you if you don't have the time to compare loans yourself, however mortgage brokers will not show you all of the loans on offer from Australian lenders. This means you won't learn how to compare loans yourself, as your broker will be doing this for you.
The vast majority of mortgage brokers will have access to a range of home loans from a variety of banks and lenders. In fact, you may even find that there are options available through a broker that may not always be readily advertised through your own regular bank. These can include having access to the following loans:
Basic home loans
A basic home loan is usually offered at a discounted interest rate, simply because it doesn't include many of the more-flexible additional features of other loans. This type of loan is ideal if you're happy to keep your interest costs to a minimum while you focus on repaying the amount you borrowed.
Standard variable home loans
One of the most commonly written type of mortgage is the standard variable home loan. This type of home loan often includes several flexible options that appeal to many lenders. This might include the ability to split your loan between variable and fixed rates. It can also include attaching a 100% offset account, redraw facilities, the ability to make extra repayments without penalty, and loan portability if you wish to keep the same loan even though you might switch homes used as security for that loan.
Fixed rate home loan
Many people prefer the option of being able to lock in their interest rates to a fixed amount. This gives them reassurance that their repayments won't change throughout the fixed term, which is ideal if there is worry about rates rising in the near future.
Home equity or line of credit home loan
A line of credit home loan is an incredibly flexible loan that allows you to access the available equity in your home to use as you wish. Essentially, you're given a large credit limit from which you can redraw or repay as much as you wish. This is great if you're funding a renovation project or funding investments. These loans can work for customers with very strong levels of discipline and keen budgeting skills. Unfortunately, line of credit loans usually come with a slightly higher interest rate than most other home loan products available.
Package home loans
Many banks offer package home loans that can give borrowers excellent discounts and benefits in exchange for an annual fee. Some packages are only available to borrowers working in specific professions, while other packages are offered to customers who borrow larger amounts of money. For investors with multiple loans that add up to a large aggregate total loan amount, these can be an excellent offer for keeping interest costs to a minimum.
Some of the key benefits of packaged home loans can include discounts off the standard variable rate of your home loan, discounts on the annual fees of bundled credit card accounts or transaction accounts and additional financial products, like personal loans, margin loans, and insurance products.
No deposit home loans
Brokers may be able to find loans with higher borrowing limits than regular loans, but a no deposit loan is generally only available with some lenders if you take out a family guarantee.
Self employed home loans
Non-conforming home loans are usually offered by non-bank lenders who are willing to consider helping those borrowers who don't fit into the bank's normal lending criteria. Many self-employed borrowers fall into a 'non-conforming' category, as some struggle to provide the last three years' worth of financials and tax returns that let them qualify for a regular mortgage through one of the big banks. Anyone who works on a seasonal, contractual or casual basis may also be considered a 'non-conforming' borrower, as they may not be able to verify a stable income.
Keep in mind that non-conforming loans are often charged at slightly higher-than-usual interest rates. These lenders adopt a 'rate for risk' pricing policy, so if your mortgage broker can help you find ways to prove to that lender that you're less of a risk, you may benefit from slightly reduced rates.
Bad credit home loans
Then there are those borrowers with 'bad credit'. These are the people who may have defaults or court judgements or even bankruptcies showing on their credit reports, but who also want the opportunity to get back into the housing market. Some non-conforming lenders will give these borrowers an opportunity, even though they may require a slightly larger deposit to qualify.
Pensioner home loans
Mortgage brokers may have access to a panel of lenders that will still consider your application if you receive pensioner benefits. However, in most cases you will need to have another stream of income from employment or investments.
The majority of brokers don't charge for their service. Brokers are paid a commission by the lenders they work with for introducing clients. This doesn't always mean, however, that the interest rates offered by brokers are higher than those offered directly by lenders. Banks generally see the value in paying commission to brokers because they introduce more customers than a bank's own branch network, and they handle the ongoing customer service after the loan is settled.
Some brokers do charge a fee for their services, but these brokers generally offer services above and beyond sourcing home loans. A mortgage broker who charges a fee might also put together a budget for you, help you identify areas in which to buy and might also be a licensed financial planner who can offer investment advice and build an ongoing strategy for your finances.
Mortgage brokers are experts in the home loan and finance fields, so in your comparisons of mortgage brokers you want to make sure you are working with the most informed and experienced broker, and one who has all of the necessary licenses and qualifications.
Know your loan essentials
With all the features that are available with loans it can be difficult to know what features will help you save money. This section of the article will explain what features of a loan can help you so you will know to ask you mortgage broker about these types of loans:
- Fixed interest rates. The fixed rate loans are suited to people who want stability and are especially useful if you want to be sure your repayments will stay the same. Yet they lack flexibility.
- Split loans. Many loans will allow you to split the loan. If you split a loan you will be subjecting different parts of your money to different loan types. This means that you will be able to secure part of your loan while taking advantage of other features with another part.
- Fees. Be sure to know if any fees will be charged to the loan. There are many fees that will be payable upfront but there may also be ongoing fees. By knowing all these fees you will be able to know exactly how much you will have to pay.
- Discharge costs. A lot of people will leave their loans early and may be charged a discharge fee. With some providers this fee can be quite large. Be sure you ask how much this fee is so you will not be stuck with a large payment when leaving a loan. Choosing a variable interest rate home loan will save you any exorbitant break costs.
There are many questions that you should ask your mortgage provider that will help you get the best loan. This article has explained that you will need to research the mortgage broker to ensure that they are well suited, ask the right questions of you broker and know what features of a loan will help you.
How can I make the most of my mortgage broker experience?
Ask for recommendations
Friends, family and colleagues can be great sources of recommendations. Many of the best brokers source the majority of their business from referrals. Ask around and see if anyone you know has had some experience with a good mortgage broker.
Research and compare
Mortgage brokers may have access to hundreds of different loan products, but it doesn't hurt to spend a little time researching your options on your own as well. Remember, this is your mortgage and it will be with you for a couple of decades to come. Arming yourself with information will help both you and your broker.
Special deals might mean special conditions
If a mortgage broker recommends a special deal, always ask if there are any special conditions attached. For example, a super-cheap interest rate with one particular lender might be unbeatable in terms of rate, but the conditions could include penalty fees for extra repayments. Other special deals may include introductory offers that sound incredible, but which revert to a much higher interest rate once the introductory period is over. Always check if there are conditions attached to any special deals you're offered.
Start a folder and keep written notes of any contact you receive. Include details such as time, date, names and any offers you receive in writing from brokers. This can be invaluable later in case of a dispute.
Approach more than one broker
Always keep in mind that different mortgage brokers will often have different lenders on their list to recommend to you. This is because each broker must gain accreditations with each individual lender in order to offer you that bank's products. For this reason, not all brokers will have access to absolutely every lender available in the entire country. They may choose a selection of preferred lenders and banks that represent a broad cross-section of clients well and stick with those. If you consider that not every broker may end up with access to every lender available, it could be a wise decision to make an appointment to talk with two or three different brokers. This may give you access to a wider selection of banks and lenders than you might otherwise have had.
In the 1980s the Australian finance industry was deregulated, which allowed for much healthier competition between lenders on interest rates, fees and home loan features. However, with such competition and choice, Australians soon realised they couldn't compare these loans on their own and so the mortgage brokering industry developed and grew.
Today, 53.7% of all home loans are organised through mortgage brokers or mortgage managers according to a March 2016 release from the MFAA. This force is pushing the bounds of competitiveness of home loans that are now being offered to Australian property buyers.
A traditional lender is a bank, credit union or building society, and these groups are known as Authorised Deposit-Taking Institutions (ADI) as they use their own funds from savings and investment deposits, to fund their home loan products. You can apply for a loan directly from the lender, or through a mortgage broker. Once your loan is approved and settled, the lender administers your loan for the entire term.
Also known as non-bank lenders, these lenders obtain their funds from investors, financiers or trust funds, and are often considered 'credit providers' and not 'deposit takers' as many of them don't have the APRA accreditation to do so. Non-traditional lenders may package their loans to be distributed by a mortgage manager or a mortgage broker. A non-traditional lender can often be more flexible in their lending criteria and can be cheaper at times.
Also acting as an intermediary between you and a lender, a mortgage manager will actually provide, administer and manage your home loan from the time of application, throughout the life of your loan. A mortgage manager is paid through the loan application fees, but your repayments are made directly to your lender.
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