Copywritten by Tracey Anderson in 2006.
Different lenders have different mortgage rates and fees, and it's not always easy to compare all the details to find the best deal. Mortgage brokers help people sort through all of these details and find the best mortgage solution possible. They do this by using resources and connections that most people don't have. When you use a broker, you can save time and money. The broker knows a lot about the business and can help a home buyer find a good deal on a mortgage because of this. The broker will have a lot of connections and will also know a lot about the process and how to qualify best. The broker will often have close relationships with lenders, who see a good broker as a valuable customer. Because of this leverage, lenders will sometimes give brokers special rates or discounts that aren't available to the general public.
Many loans in Australia are started by brokers because they make the process easier for their clients. In every state, there are many brokers you can trust. Choose one that has a good name and is in good standing with the Mortgage Industry Association of Australia (http://www.miaa.com.au), a self-regulating group that requires all of its members to follow a set of ethical best practises.
Look for a broker who is independent and fair. One would expect a broker to get paid for their work, but some try to sell mortgages with high fees that aren't in the best interest of the consumer in order to get higher commissions. The Australian Securities and Investments Commission (http://www.asic.gov.au) has taken action against brokers who say they are impartial but are not. The ASIC says that if a consumer wants to use a broker, they should first look around to see what rates are out there. This will give them enough information to know if they are getting a good deal.
Because there wasn't much regulation in the past, some people were hesitant to use mortgage brokering services. All types of financial services tend to have a lot of rules, and for good reason. Consumers need to be protected from shady and predatory businesses. And there are predatory mortgage brokers, just like there are predatory people in every part of the financial world. Still, most of them are honest and do useful work. And recently, the mortgage brokering industry has gotten a lot of attention, and Australia is in the middle of a regulatory overhaul meant to keep mortgage brokers on a level playing field.
At the moment, each state is in charge of regulating the mortgage brokering industry. Check with your local government's regulatory agency to see if you meet the requirements and to find out the status of your broker. The Consumer Credit Legal Centre sent a report to ASIC that showed some of the differences between the states (http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/finance mortgagebrokers report.pdf/$file/finance mortgagebrokers report.pdf). The laws for brokers are more specific in NSW, Victoria, the ACT, and Western Australia, but not all states have a licencing system for brokers. National regulation would make sure that consumers are protected by putting in place stricter rules all over the country. In the regulatory environment we have now, brokers are even more aware of how important it is to be fair and honest.
