About Mortgage in Australia

Australia mortgage

Finding a competitive loan from among the great variety of financial products available in the debt market today can be a very stressful experience.

Where once you would head straight for your bank to organize a loan, today banks have a relatively limited range of offerings and are often driven by their sales targets.

The broker's role is to search for, compare and offer you a choice between the various options that meet your requirements. Your broker knows what products are on the market and can research these to find the right one for you, thus saving you valuable time.

You don’t have to wade through all the financial jargon or worry about which product has the features you need. Your broker knows what you need, knows what the lending institutions have to offer and matches you with the best product.

The mortgage broker industry in Australia

According to IBISWorld, mortgage brokers account for over 30% of the all loans in the current Australian market, and if we follow the trend in the USA, where brokers originate over 75% of the total volume of financial products, you can imagine how this figure can be expected to grow in the future.

A major factor in the growing popularity of the industry is the public’s disillusionment with the banking industry.

Every week, there are news reports of the major banks closing their branches, so it’s no wonder this poor service makes clients switch from impersonal bankers to brokers they’ve come to trust.

More information is presented in A Report to ASIC on the finance and mortgage broker industry conducted by Consumer Credit Legal Centre (NSW) Inc. in March 2003. Click here to download the report (.pdf format 870MB).

How the industry is being regulated

While there is no formal regulatory body in the finance broking industry, the Mortgage Industry Association of Australia (MIAA) and Finance Brokers Association of Australia (FBAA) perform supervisory roles.

Their main focus is on developing and reinforcing industry standards to ensure consistency and quality in services provided by brokers.

Tips On Dealing With A Broker

How to get most of it and protect yourself when using a broker

Phil Naylor, CEO, Mortgage Industry Association of Australasia gives his tips on dealing with a broker:

Choosing your broker:

Is the mortgage broker an accredited mortgage consultant (AMC) with the MIAA?
Apart from being accredited as a mortgage specialist because of their high level of training and strong track record, an AMC also belongs to an MIAA member company, which means they are must adhere to the MIAA’s strict Code of Practice and are covered by the Mortgage Industry Ombudsman Scheme.
Which lenders and which loan products do they offer?
Generally, good brokers should have at least 15 lenders on their panel which means they can find a loan suited to your specific needs.
How does the mortgage broker get paid?
A mortgage broker should disclose the commission they will receive on the loan before submitting the application on your behalf. Generally there should be no fees paid to the mortgage broker by the borrower unless some other service is being provided.
How does the mortgage broker determine suitable loan options for you?
Ask your broker to outline why they have recommended one loan over another. This may relate to the amount of deposit you have, level of documentation, and length of employment. Remember the cheapest loan may not be the one that best suits your requirements.

What does a mortgage broker do for you?

Meets with the borrower to understand their specific loan needs.
Researches the range of lenders and loan products they have available to provide options for the borrower to choose from.
Assists in completing the loan application and collecting the appropriate documents for the lender’s requirements.
Submits the loan application and assists the lender with any further questions throughout the approval stage of the loan.
Assists the borrower and lender as required at settlement.
Be available to assist the customer as the need occurs at post-settlement.

To learn more about the finance broking industry, go to our useful links page.

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