Should I use a mortgage broker?

When it comes to taking out a home loan and navigating the home-buying journey in general, it can help to have someone on your side who knows what the heck’s going on. With so many different home loans, types of interest rates, features and facilities to choose from, it can quickly become an overwhelming process. A mortgage broker can help to guide you through, offer advice and find the best loan for your needs.  

What does a mortgage broker do?

A mortgage broker, also known as a loan broker or finance broker, acts as the middle person between the home buyer and lenders. It’s their job to arrange a home loan with the best terms and rates to suit your individual circumstances and needs.

To find the best loan, a mortgage broker will work with you to:

• Understand your needs and goals when it comes to buying a house
• Figure out how much you can afford to borrow
• Find options to suit your circumstances
• Explain how each loan works and what it costs, taking into account the interest rate, features and fees
• Apply for a loan and manage the process through to settlement

Is there a cost involved when using a broker?

Usually there’s no cost involved with using a mortgage broker. Typically, they’ll get commission or referral fee from the lender for signing up new borrowers. However, there are some brokers that charge a fee directly to the borrower. Be sure to get all the details upfront before you engage their services.

What are the advantages of using a broker?

Whether you’re looking to save time or you’re after advice, using a mortgage broker can provide you with a stack of different benefits.

You come first

Mortgage brokers have a statutory obligation to act in the best interests of their clients, unlike lenders themselves. When you work with a broker to find a home loan, you can count on them to put you first.  

Do the groundwork for you

If you’re strapped for time or don’t want the stress of researching different lenders, engaging a mortgage broker can help you save time and effort. Rather than you doing all the hard work yourself, a good broker can help you with the following:

• All of the necessary paperwork  
• Take care of the research for you
• Make sure the application process stays on track, from application to settlement

Better access to lenders

In some cases, you might only be able to access certain products through a mortgage broker. They usually have a good understanding of the market and can hunt down a loan that best suits your needs. Plus, most brokers have ongoing relationships with certain lenders, which can help them when it comes to negotiations and speeding up the application process.

Negotiating power

Because of the relationship brokers have with lenders, they can often negotiate a better rate or deal for you. From lower fees to reducing interest rates, a mortgage broker can potentially help you save money on your home loan.

Expert advice

Most mortgage brokers know their stuff when it comes to taking out a home loan. They’re experts in their field, so they can help you understand the process and answer any questions that you may have. They also know the right questions to ask you to get a better understanding of your situation and what you want to get out of a loan.  

Disadvantages of using a broker

While mortgage brokers can offer a range of benefits to you as a home buyer, there are some potential pitfalls that may come with using a broker.

Limited lenders

While mortgage brokers often have access to a range of different lenders, there are a select few lenders who don’t work with brokers. In some cases, these lenders may actually offer more favourable rates or terms than what a broker can find for you. So although a broker can certainly help to do the bulk of the groundwork when it comes to finding the best home loan, it’s still worth doing a bit of research yourself to understand what’s available to you.

Fewer options

Because some brokers have affiliations with certain lenders, they may have access to fewer home loan options. These limited options could mean that you’re not getting the best deal out there.

Lack of experience

Relevant qualifications and industry experience can differ vastly from broker to broker. So while a good broker can help to make the home buying experience as seamless and stress-free as possible, a bad broker can leave you in a whole world of pain and potentially without a roof over your head. Make sure you do your due diligence to find a respected, successful broker before engaging their services.

Working with a mortgage broker offers a range of advantages and disadvantages. At the end of the day, everyone's situation is unique, so it’s important to make the home buying process work for you, whether that involves a broker or not. Chat to one of our home loan experts today to learn more about how Unloan can help you.  

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This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍

Unloan is a division of Commonwealth Bank of Australia.

Applications are subject to credit approval, satisfactory security and you must have a minimum 20% equity in the property. Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. (For purchase loans a minimum 10% equity is required - however a Lenders Mortgage Insurance (LMI) premium and higher interest rate apply. In some cases, depending on the property’s location or type, an LMI premium may also be required for LVR between 70.01% to 80%). For loans with Lenders Mortgage Insurance (LMI) the minimum loan amount is $10,000, maximum loan amount is $3,000,000 and total borrowings per customer across all Unloan loans is limited to $3,000,000).

Unloan offers a 0.01% per annum discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan.

*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. In certain circumstances you may be required to pay a Lenders Mortgage Insurance (LMI) premium. Learn more about why this is applied and how it works. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.