How does an Australian mortgage broker work?by Enlighten Yourself
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If you’re getting ready to purchase your first home, you might be wondering what a mortgage broker is and what their importance is to your hunt for a home. In this article, we’ll discuss the importance of mortgage brokers and how exactly an Australian mortgage broker works.
What is a mortgage broker?
Your mortgage broker will be your link between the banks who will be lending you the money and yourself. Working directly with a bank may not be possible and, even if it is, it can be incredibly daunting and intimidating. They require a license, education (a diploma in Financial Services), and credentialing (mostly commonly through the MFAA. They are not allowed to work independently for the first two years. After that, using their connections with other mortgage brokers, lenders and the industry in general, your mortgage broker will find out your specific personal and financial situation and work to get you the best deal and property for your money. A few other things a mortgage broker does :
- Assess your needs : Starting with your financial situation (this will let them know what your borrowing potential is), a mortgage broker will help you compare and contrast different mortgage loans so that you can find the best fit.
- Help you gain pre-approval : Your mortgage broker will help you to fill out the paperwork.
- Negotiate on your behalf : After deciding on a mortgage type, your mortgage broker will speak with the lenders on your behalf to get you the most competitive deal possible.
- Provide support : Once you’ve chosen a lender, your mortgage broker will help you complete the loan paperwork and communicate with the bank. They will also help you organise and submit all necessary paperwork.
How are mortgage brokers paid?
Most mortgage brokers aren’t paid directly, but instead accept commission from the lenders themselves. Usually this is paid as a percentage of the total sale. The most common type of commission is called “upfront commission” – normally between 0.3% and 0.5% of the purchase price. Another, less common type of commission is called “trailing commission” – this is paid monthly to the mortgage broker based on the remaining loan amount yearly (normally between 0.1% and 0.2%).
How does a mortgage broker establish a lending panel?
Many mortgage brokers use what’s called an “aggregator (dealer wholesaler)” in order to gain closer access to major lenders. Many aggregators come from franchised brands, but they may also be independent or discount businesses. They will usually charge a fee for allowing the broker access to their lending panels and other, additional services. Normally that fee is a small percentage of either the upfront or trailing commission although it could be a flat, monthly rate. They may also charge a joining fee to the mortgage broker wanting access, called an “administration fee.”
A qualified Australian mortgage broker does a lot more than what it may appear on the surface. Please check out www.mortgagebroker247.com.au for additional information!
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