Should I Use a Mortgage Broker?

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Written by

Luke Carlino

Updated 29/01/2024

What changed?

Rewrite to update tone of voice and content
Our aim is to help you make better informed decisions. That’s why iSelect’s content is produced in accordance with our fact-checking and editorial guidelines.

Find out more about how we make money.

View our Privacy Policy.

*iSelect is the trading name of iSelect Mortgages Pty Ltd (ABN 86 148 217 181). iSelect Mortgages Pty Ltd is a credit representative (Credit Representative 400540) of Lendi Group Distribution Pty Ltd (Australian Credit Licence 246786). iSelect provides a referral to Lendi Pty Ltd, a Credit Representative of Lendi Group Distribution Pty Ltd (Australian Credit License 246786). iSelect Mortgages Pty Ltd receives a commission from Lendi Group Distribution Pty Ltd, the licensee for each new customer account created and for each home loan submitted through this service. Learn more.

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What does a mortgage broker do?
What are the reasons to use a mortgage broker?
How do mortgage brokers get paid?
How do I tell if a mortgage broker is credible?
How will I know if a mortgage broker is good?
What documents will I need to provide?
Can I refinance my Home Loan with a mortgage broker?
Are there any cons to using a mortgage broker?
What’s an easy way to compare Home Loans?

What does a mortgage broker do? 

Think of a mortgage broker as your Home Loan matchmaker. They book the candlelit dinner, organise the music and basically play the middle-person between you and the lenders, aiming to get you the best deal possible.  

A mortgage broker can help you determine the right loan, guide you through the home-buying journey and chat with banks on your behalf. They can act as a sounding board and take care of some of the details, from finding the loan you want to navigating the paperwork mess. They also usually have a large network of banking relationships that can sometimes be leveraged to get you a better deal.  

What are the reasons to use a mortgage broker? 

Have you ever tried talking to a bunch of lenders at once? It’s like learning a new language. While you can definitely figure it out on your own with a bit of effort, using a mortgage broker is a bit like having a translator. 

On top of translation, it can also be nice to have a knowledgeable person looking out for your best interests. That’s what mortgage brokers are meant to do. They evaluate your specific situation, priorities and needs, and then give you options to choose from.  

It’s also worth noting that mortgage brokers aren’t just for first-timers. People who already have Home Loans and even seasoned property investors sometimes use brokers. This can be for a few reasons:1Lendi – 5 benefits of speaking to a mortgage broker 

  • If you want to refinance your loan, brokers can help you navigate the process, compare interest rates and restructure your loan.  
  • If you’re investing, brokers can help you choose areas that are expected to grow in value, talk you through the property market and help you figure out your tax situation.  

How do mortgage brokers get paid? 

Brokers get paid a commission from banks when you sign up for a loan. This can either be a flat fee or a fee based on the value of your Home Loan. The good news is that usually, the banks foot the bill even though the brokers are working for you.2Moneysmart – Using a mortgage broker 

There’s also a rule called ‘best interests duty’, which is designed to make sure brokers don’t trick you into a bad deal just to make a buck. The rule means brokers are legally bound to make recommendations that are in your best interests.3Australian Securities & Investments Commission – Acting in the client’s best interests  

Mortgage brokers might also get something called a trail commission.4Forbes Advisor – What Does a Mortgage Broker Do? It’s like an ongoing bonus if you keep up with your payments. But the commission disappears if you can’t handle the mortgage and miss payments. So, they’ve got a big reason to make sure you pick something you can manage. 

Quick Tip:

Negotiating with a lender can be scary. Mortgage brokers can actually go head to head with lenders and negotiate loan terms on your behalf. By leveraging their industry knowledge, they’re well placed to go to bat for you and to present your application in the best possible light.

Debbie Shankar

Group Content Manager, Lendi

How do I tell if a mortgage broker is credible? 

Finding a top-notch mortgage broker should be like finding a trusty sidekick on your Home Loan adventure. Here’s how to spot a credible one: 

  • They’ve got credentials: First, they need to be legit. They should be listed as either a Credit Representative or a Credit Licensee on ASIC Connect’s Professional Register
  • They get you: A good broker isn’t just about numbers; they should understand your wallet and dreams. They work with you to determine what you can realistically afford and what you’re aiming for in your dream home. 
  • They’re clear about the money stuff: Money talk can be tricky, but a solid broker lays it all out. Their services are usually free because they get a commission from the lenders. And they should be open about all the costs, fees, and commissions without hiding anything. 
  • They’re transparent: In a similar vein, legit brokers are open about how they get paid, and if they’re members of a professional group like the Mortgage & Finance Association of Australia, they disclose everything.5Mortgage & Finance Association of Australia – Code of Practice, p2 If they dodge questions about money, that’s a red flag. 
  • They keep you in the loop: You should know where your application stands and what’s happening at every step. Plus, they give you all the paperwork before moving on to the next stage. No surprises, no confusion. 
  • They have glowing reviews: Word of mouth is gold. If your friends can’t hook you up, check online reviews. See what other homebuyers are saying about brokers in your area. A solid reputation is worth its weight in gold. 

How will I know if a mortgage broker is good? 

Experience matters! A great broker has been around the block, been there, done that and dealt with all sorts of situations. They should give you their credit guide up-front.6Australian Securities & Investments Commission – Responsible lending disclosure obligations: Overview for credit licensees and representatives It’s like their resume but for mortgages. It’ll help you know who you’re dealing with and what they offer from the jump.  

A good broker also doesn’t just work with one or two lenders. They’ve got a whole menu of banks and credit unions to choose from. The more options, the better your chances of finding the terms you’re looking for.  

And remember, choosing a loan isn’t just about the interest rate. A good broker covers all the bases. They break down all the costs, government schemes, and grants you might snag. They dish out multiple loan options, explaining the ins and outs so you can pick what’s best for you. They compare lenders, tackle issues, and ensure your loan is sealed on time.  

What documents will I need to provide? 

Yep, to get approved for a loan you’re going to need a whole lot of documents. If you can collect them from the jump and bring them along to your chat with a mortgage broker, you’ll save some time. Here are the main things you’ll need:7Lendi – What documents do I need to get a mortgage? 

  1. Your ID (like your passport or driver’s license).
  2. A peek at your recent transactions and bank statements. 
  3. Got savings? Prove it! Whether it’s cold, hard cash or equity from your current home (if you’re moving), bring those papers along. 
  4. A summary of your monthly expenses. 
  5. Are any debts hanging around? Whether it’s credit cards or other loans, your mortgage broker needs to see the whole picture. 

Every situation is different, so the broker might ask for a few extra bits and pieces based on your unique deal. But the good ones will guide you through the whole document dance.  

Can I refinance my Home Loan with a mortgage broker? 

Absolutely! Whether it’s a new loan or a refinanced one, brokers are usually game.  

If you’re drowning in interest charges and desperately trying to save some hard-earned cash, refinancing might be able to help you out. According to a recent PEXA report, Australians who refinanced their Home Loans saved an estimated $1,524 per year on average in 2022.8PEXA – September 2022 consumer refinance report 

While refinancing can save you some money, it can be a bit of a hassle to go it alone, so it can be good to team up with a mortgage broker. They’ll help guide you through the process and try to find you the best deal, the same as they would with a new loan application.  

Are there any cons to using a mortgage broker? 

Not all lenders play nice with brokers. Some of them prefer to do their own thing without any middle-people involved.This means you could potentially miss out on some good loan options. Your broker’s choices might be limited, which could mean you’re not getting the absolute best deal out there.  

There’s also always a small risk that a broker could make a recommendation because it benefits them financially, not because it’s best for you. There are laws to prevent this from happening,9Australian Securities & Investments Commission – Acting in the client’s best interests  but that doesn’t necessarily mean the practice is 100% stamped out. If a broker isn’t transparent about the lenders they work with and the different options you have, that could be a sign to be wary.  

What’s an easy way to compare Home Loans? 

Feeling ready to dive into the world of Home Loans? Great news! We’ve teamed up with Lendi to make your hunt for a loan way simpler. Just click here* to kick-start the process. Let the Home Loan adventures begin!  

Get started on comparing home loans today!*

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*iSelect is the trading name of iSelect Mortgages Pty Ltd (ABN 86 148 217 181). iSelect Mortgages Pty Ltd is a credit representative (Credit Representative 400540) of Lendi Group Distribution Pty Ltd (Australian Credit Licence 246786). iSelect provides a referral to Lendi Pty Ltd, a Credit Representative of Lendi Group Distribution Pty Ltd (Australian Credit License 246786). iSelect Mortgages Pty Ltd receives a commission from Lendi Group Distribution Pty Ltd, the licensee for each new customer account created and for each home loan submitted through this service.