Picture this: you’re on a quest for the ultimate loan or financial product, but the treacherous financial landscape is a maze of financial jargon and ‘criteria needs’ and you’re not ready to face it all alone. We try not to take a pessimistic approach but often it can feel like a jungle out there and you are a bewildered wanderer stuck between navigating your wants, needs and circumstances. 

Enter the mortgage broker; bridging the gap between you and the banks. 

Okay, enough of the metaphors, what you’ve come here for are the hard facts about what a mortgage broker does, why you might need a mortgage broker and where you can find one. 

So firstly, what is a mortgage broker?

A mortgage broker or financial broker is someone who acts as a middleman between individuals seeking financial assistance, products, or services from banks or lenders. Their primary role is to assist borrowers in finding the most suitable loan or financial product that aligns with their specific criteria, preferences, and circumstances. 

What does a mortgage broker do?

Mortgage brokers are not your average Joes; they have a wealth of experience, knowledge, and expertise in the residential loan market to identify the most suitable and favourable loan options among their network of lenders.  

At Finselect Group, we have a network of more than 50 lenders. Our strong relationships with these lenders have earned us their trust. Transparency is at the core of our values, and we believe in working with our clients to help them reach their goals in a measured and well-informed way. Drawing from our extensive experience and expertise in the ever-changing financial and brokerage landscape, we provide transparent, accurate, and fair lending solutions tailored to you and the perfect product that suits your needs and preferences. Want to find out more? Give us a call. We are always here to help. 

Do you have to use a mortgage broker?

You do not have to use a mortgage broker, but it is always advised in order to find the best deal and product that match your wishes, needs and circumstances. Engaging a mortgage broker can alleviate the challenges and complexities associated with navigating the vast range of financial providers and services, ultimately leading to potential long-term cost savings for you. A mortgage broker often takes the stress and headache out of finding a mortgage, revealing the hidden gem of a loan that perfectly suits you.

Can mortgage brokers get you a bigger mortgage?

Although mortgage brokers can frequently secure lower interest rates compared to what you might find independently, they also have the capacity to qualify you for a larger loan amount. Moreover, they may even inform you about superior mortgage options that are only available directly through them. But most importantly, brokers will handle your application process from start to finish, ensuring a smooth journey until completion.

As long as you possess a down payment of 20% or more, most mortgage brokers can provide you with a variety of home loan options, helping you take a step closer to your dream home.

And if you can’t secure a 20% down payment, some mortgage brokers can help you find the best Government scheme and check your eligibility.  

At Finselect, we’re dedicated to making the process of securing finance as simple and stress-free as possible for everyday Australians. We’re passionate about educating people on building wealth and paying off their mortgages faster

Our approach is centered around transparency and personalisation. We offer accurate and fair lending solutions, backed by years of experience and knowledge in the constantly evolving financial space, to help identify the best product for each individual. Our track record speaks for itself – we have built close relationships with over 50+ lenders in our network and have gained the trust of our clients. 

Taking a holistic approach to our client’s finances means the service does not start or end with us. We partner with like-minded and trusted accountants, buyer’s agents, property agents, financial planners, liquidators, administrators, and others to implement the right strategies for our clients, whether it be assistance in finding a home or investment property, tax strategies, superannuation reviews, and insurance, or whatever else is needed to support our clients. 

We believe in providing clarity and control to our clients, so they can stay ahead financially. No guesswork, no hassle, just transparent and personalised solutions to help achieve your financial goals. 

But remember, it is not always about getting a ‘bigger mortgage’ or finding the best rate. The goal is always to find a loan that you are comfortable with paying and then paying off this loan at a time you are comfortable with.  

Don’t get caught up in the allure of boasting about low-interest rates alone. While rates do matter, they’re not the sole determinant of success. Achieving a 1% or 2% mortgage rate doesn’t automatically make someone a winner in life. True success lies in paying off your mortgage within a set timeframe. 

Why we are different

It may seem like a strange notion with the rise of mortgage rates all over the news, but in our business, whether the rates are low or high it doesn’t change our key focus; to guide and educate you towards becoming mortgage-free as quickly as possible, so the concern about the rates and ‘getting a bigger loan’ becomes less of a worry.  

That is why we champion our Accelerated Program which is designed to help you achieve financial freedom sooner. 

The Accelerated Program: Putting plans in place to pay off your mortgage sooner.

At Finselect we create customised financial plans based on how quickly our clients aim to repay their mortgages. To ensure they stay on track with the program we’ve designed for them, we ask that clients send us statements regularly to monitor their progress and to ensure they are ‘sticking to the plan’. If at any point we notice deviations, we review this with the client and advise or make necessary adjustments. The Accelerated Program helps our clients feel in control of their finances so that they can enjoy and stay on track in their financial journey.

It is not as ‘full on’ as it sounds. The client can be as hands-off or hands-on as they wish but they can rest assured knowing we are always there to offer them guidance and a helping hand.

Consider us your personal finance trainers, guiding you towards a healthier financial future.

When Should You Use a Mortgage Broker?

You should look to seek a mortgage broker as soon as you are thinking seriously about investing in a property. Whether you are ‘just looking’, scoping out your options or already calling or viewing properties, often knowing what options are available and your borrowing capacity is the first step. After all, you wouldn’t start a workout regime without knowing your capabilities and limits.

In fact, we recommend that you see a mortgage broker before you start looking. We all like to window shop, but often the fun is knowing what you can afford and what is truly available to you.

Sure, checking the current market is always a smart move, but before diving into the world of loans and property viewing, there are essential steps you should take to make the whole process easier. The steps are not always in the same order for everyone. Every person’s journey is different. For example, you may wish to research about criteria requirements for the location of the property you are viewing before any of the following steps:

1. Get in touch with a broker to assess your borrowing power 

Your borrowing power determines the maximum loan amount you can secure. Simply put your borrowing power is one, if not the most, important aspect of loan affordability and mortgages. 

Your borrowing power is based and calculated on your income, expenses, and deposit size. Without knowing your borrowing power, you will not truly know your options. 

It is crucial to contact a broker to discuss your options and clarify your goals and objectives. A mortgage broker will thoroughly evaluate your borrowing capacity and formulate a plan tailored to your circumstances. 

At Finselect our help doesn’t just start at obtaining your home loan.  

We can evaluate your financial situation to determine your borrowing power and affordability, helping you understand how much you can spend before hunting for the perfect property.  

We can also help you research your dream location and the criteria that are necessary to purchase in this area.  

Once you’ve got a better understanding of where you stand you and have found the perfect property, we’ll take the lead in finding a suitable home loan that matches your needs.  

With our expertise, you can confidently navigate the process and secure the ideal loan for your new home no matter the circumstances, we are always there to discuss and guide you. 

2. Obtain pre-approval before property hunting 

Avoid the allure of impulsive decisions and seek pre-approval before exploring properties. With pre-approval, you’ll be well-informed of your borrowing capacity, guiding you towards more suitable choices. 

What is home pre-approval?

Home loan pre-approval, also known as conditional approval, signifies that a lender has agreed to provide you with the necessary funds for buying your home. However, it’s important to note that this is not the final approval yet. Pre-approval is not set in stone but by obtaining pre-approval for your home loan, you gain the confidence to explore properties, knowing that you are already on the right track towards securing the necessary financing for your dream property.

Looking at buying a property at an Auction?

Auctions can be intense, and it’s easy to get caught up in the excitement, leading you to bid beyond your intended budget. It is great to be the highest bidder, but it also pays to be a budget-conscious bidder (try saying that three times).

We know that using caution at auctions doesn’t sound as fun but knowing your limits is always great when it comes to financial decisions. Especially a very emotional purchase such as buying a home. Sometimes your heart can get in the way of your head but knowing your limits and understanding the property’s value is important to make clever purchasing decisions.

We know that this article should be about what a mortgage broker does but here at Finselect, we take a different approach.

We work with our clients to construct a plan and document that can take with them to auctions. This document provides important information to help them make informed decisions and notes any crucial factors that may influence their bidding choices, such as monthly repayments based on different purchase prices. This empowers our clients to bid wisely and stay within their intended budget.

3. Verify eligibility criteria for your desired property 

Just like Government schemes, different properties and locations may have specific conditions and lender requirements. Therefore, you must ensure your meet all the eligibility criteria associated with your chosen property. And guess what? That is right, mortgage brokers can help with this process too! 

A skilled mortgage broker can ensure a stress-free and smooth home loan application process by checking all eligibility criteria for your chosen property. Most importantly, they’ll make sure that you are eligible, making the entire experience easy and hassle-free for you. 

Another reason we’re different. 

Taking a holistic approach to our clients’ finances means the service does not start or end with us. We partner with like-minded and trusted accountants, buyer’s agents, property agents, financial planners, liquidators, administrators, and others to implement the right strategies for our clients, whether it be assistance in finding a home or investment property, tax strategies, superannuation reviews, and insurance, or whatever else is needed to support our clients. 

4. Prepare your documents

Poor planning equals… terrible performance. Plan, plan and plan. Gather the necessary documents, such as identification, proof of employment, recent payslips, asset details, and financial information to get you started. 

Your mortgage broker can help advise you on what documents are needed and how far back they need to be dated so that you can efficiently prepare your application and gather all the essential paperwork and supporting documents. They can also guide you through the process of filling out the application, ensuring that every detail is complete and accurate. 

5. Find the perfect home loan 

And now we get to the good stuff: Finding the perfect home loan tailored to your circumstances and needs. Your mortgage broker will assist in comparing various options, including interest rates, fees, repayment types, loan terms, and features. 

At Finselect, our dedicated mortgage and financial brokers use all the information gathered from our discussions to find the most suitable loan for you, aligned and tailored to your circumstances and objectives.  

To put it simply; we prioritise you and your needs. 

We prioritise your goals and aim to guide you effectively towards achieving them, through loans, our programs to keep you on track and our advice to get your ahead in life. 

If you are looking to find the perfect home loan or just looking to talk to someone, reach out to us today. As brokers, we have strong connections with real estate agents, solicitors, conveyancers, and Buyers Agents, enabling us to guide you in your search for the property of your dreams.  

No matter the circumstances, where you are in your buying journey or the questions you ask.  

No question or query will be met with a brick wall; we believe in building walls not creating them and believe in building bridges not creating barriers. 

Unsure about what you can afford or how much of a deposit is required? 

Contact us today. Even with a smaller deposit than you feel is necessary, we may be able to assist. Unlike the banks, we work for you. 

Is it better to work with a mortgage broker or bank?

Working with a mortgage broker proves more advantageous than directly approaching a bank. A mortgage broker acts on your behalf, prioritising your best interests and always striving for the optimal outcome.

How does a mortgage broker differ from a bank?

Banks may not always provide the same level of personalised service or always work in your best interest compared to a mortgage broker. And in the end that is what you really want from a mortgage or financial advisor; your best interests at the forefront of all that they do and what they advise to shape what they provide.

A mortgage broker can benefit you in a variety of different ways, that a bank just simply cannot hope or want to do. Imagine the process of buying a suit. Banks are similar to retail stores they have hundreds of visitors, the same ‘cookie-cutter’ loans and simply they focus on making money. Similar to a bespoke suit tailor, a mortgage broker can help tailor your mortgage to fit you, they can offer you different styles to see what fits and talk with you to add the finer touches that all together are made for you. The perfect fit. Call us biased but banks just don’t measure up. With a mortgage broker, you get:

• A more streamlined credit application 

A broker helps you understand the required proof you need for credit checks. They offer a quick and personalised service by communicating and working as a go-between for you and the credit assessors, ultimately helping facilitate a faster and easier process. Banks, however, may not offer a similar service, leaving you to navigate additional steps and third parties independently. 

• Efficient communication with third parties 

A Mortgage Broker can also help liaise with solicitors, valuers, real estate agents, and builders, ensuring a smoother mortgage application process. Whereas, banks often do not engage with third parties as actively, potentially leading to delays and extra expenses for you. 

• A Mortgage Broker is your single point of contact 

Your broker acts as your primary source of information and reference throughout the entire process, keeping you updated at each application stage. This may seem insignificant, but this service helps to keep the process transparent and easier for you. It helps avoid miscommunications, helps keep on top of documents that must be completed and ensures all the little details are thought of and addressed. 

The bottom line 

Quite simply, Mortgage Brokers help dot the i’s and cross the t’s, they work for you, not the banks so they ensure you are informed at all times on the process and what is required from you. 

Ultimately most banks are focused on their own interests and therefore may not offer the same level of personalised attention as a mortgage broker. Banks leave you to coordinate with various parties independently which can cause all parties to not stay informed or across all parts of your loan. 

Ultimately, a mortgage broker saves you time and money by expediting the process and comprehending your unique needs throughout the mortgage process, asset acquisition, and financial application journey. 

At Finselect, we work for you. Not the banks  

We believe that your loan should work for you; not for us and certainly not for the banks. 

We are here for everyday Australians. We cut out all the jargon, the guesswork and the hassle. We just offer transparent and personalised solutions to get you and your finances ahead.  

We search the market inside and out to find the best outcome for you. And what’s more our trusted expert Mortgage and Finance Brokers will keep you updated throughout your mortgage application, giving you clarity and control. 

Is it worthwhile using a mortgage broker?

Yes, it is very worthwhile using a mortgage broker who can potentially save you time, effort, and money. People use mortgage brokers because they find products and services banks cannot, saving you thousands with their exclusive access to products, rates and interest from banks and non-bank lenders, not found online or through a Google search.

What are the benefits of using a mortgage broker?

The benefits of using a mortgage broker are: 

• Convenience 

Mortgage brokers are typically flexible and accommodating when it comes to scheduling appointments. They are willing to arrange meetings at your convenience, even after regular work hours or on weekends. This can help those with busy schedules or various work and family responsibilities to balance. 

• Brokers do all the legwork! 

Mortgage brokers do all the legwork and conduct all the groundwork to discover the perfect home loan that suits your requirements. They provide assistance throughout the entire application and settlement process. This includes handling all the necessary paperwork, securing pre-approval, guiding you through the application for any applicable government grants or incentives, and keeping you well-informed about the progress of your application. 

• Expert advice 

A mortgage broker can help discuss the benefits and cons of different loans and any details which makes a big difference between choosing that loan or opting for another. They will discuss factors such as the option to make extra repayments or access a loan offset account which could become important in deciding what loan is right for you. Having a knowledgeable guide to walk you through the advantages and disadvantages of various options can be incredibly valuable in securing the right home loan for your needs. 

• Real people, real feedback 

Mortgage brokers possess feedback from other clients regarding the performance of different home loans, providing them with valuable insights into how various loan options are likely to fare for your specific circumstances. What’s more, unlike banks, mortgage brokers often have personal feedback from clients and reviews, so you know who you are dealing with and who is dealing with your application. No more robots on calls and forwarding to different bank customer service desks.  

Can a mortgage broker get a lower rate?

Mortgage brokers can help you navigate the products and mortgages available to you to help get a lower rate. They can also find better deals with their trusted portfolio of providers, offering rates not always available from the banks. However, the term ‘lower rate’ is often thrown around as an incentive but, as we’ve mentioned previously, a lower rate does not always constitute a better deal or a better product. A mortgage broker will instead discuss your personal circumstances and find you the best product or solution. They will be able to advise you on the best rate, the best way to help you pay off your mortgage faster and discuss the best mortgage repayment options based on your personal circumstances and what is feasible.

How Much Does a Mortgage Broker Cost?

The cost of a mortgage broker varies depending on the transaction and the specific services you receive. Similar to loans, there’s no one-size-fits-all approach. An upfront and transparent mortgage broker will openly discuss fees during your first conversation.

At Finselect, we always are always upfront about our costs. We provide full disclosure of our commission rates for all bank recommendations in our Loan recommendation PDF and again in our Credit Proposal before submitting any applications.

What is the commission for a mortgage broker?

Mortgage brokers usually receive 0.65% – 0.70% upfront + 0.15% + GST p.a. trail income and lenders usually charge a commission of approximately 1% on the mortgage. It’s essential to explore various options and inquire about the specific fees or payment methods each broker employs. Reputable brokers will provide clear upfront disclosure of the entire cost.

At Finselect, we always are always upfront about our costs. We provide full disclosure of our commission rates for all bank recommendations in our Loan recommendation PDF and again in our Credit Proposal before submitting any applications.

What are mortgage broker fees and commissions?

Commission rates for Mortgage Brokers can differ from one lender to another. Since Mortgage Brokers perform tasks similar to banks and facilitate successful loan applications, lenders are willing to pay them a commission, sparing the customer from any direct payment.

In the majority of cases, mortgage brokers receive two types of commissions: an upfront commission and an ongoing trail commission for the business they generate for the bank.

These commissions are disbursed after your home loan has been settled successfully. The actual amounts are calculated based on a percentage of the loan amount and the Loan to Value Ratio (LVR).

It’s important to note that the specific details concerning the timing and method of commission payments can vary from one lender to another. However, as a general rule, mortgage brokers typically receive their commissions in this manner.

Mortgage Brokers receive compensation through two methods: upfront commission and trial commission.

What is upfront Commission?

0.65% (+GST) to 0.7% (+GST)

The upfront commission is a single payment made approximately 30 days after the settlement. Throughout the process, a Mortgage Broker is obligated to disclose the commission to you. Although the rate may differ depending on the lender, the typical upfront commission ranges from 0.65% to 0.70% + GST. It’s important to note that the customer does not bear any responsibility for paying the upfront commission.

In certain cases, certain banks have adopted a system where the upfront commission is calculated based on the new loan balance after deducting any offset account balances.

What is trail commission?

Trail commission: 0.165% (+GST) to 0.275% (+GST)

Trail Commission is an additional mechanism designed to ensure that a Mortgage Broker places the customer with a bank that satisfies their needs over the long term. It involves the Mortgage Broker receiving a small commission each month the customer stays with the same lender, with the amount typically increasing gradually during the initial five years. However, these payments cease if the customer pays off their loan or decides to refinance through another bank or Mortgage Broker.

The purpose of this trailing commission is to cover the ongoing costs the Broker incurs while maintaining your loan. These expenses include an annual rate review, loan restructuring, and handling loan increases and refinance on your behalf. The usual amount for this trial commission is approximately 0.15% of the loan amount per year.

What is Clawback of Upfront Commissions?

Clawback of upfront commissions occurs when a customer pays off or refinances their home loan within two years. In such cases, a lender can enforce a clause that requires the Mortgage Broker to repay their initial commission. While this practice may be disheartening for many Mortgage Brokers, it can actually benefit the customer. It incentivizes the Mortgage Broker to select a bank that aligns well with the customer’s preferences to avoid commission repayments.

Recently, several banks have introduced a ‘partial clawback’ approach, wherein they will claw back the commission for any lump-sum payments made within the first 12 months. This helps encourage long-term customer satisfaction and ensures that the Mortgage Broker considers the best-fit bank for the client’s needs.

What do I need to know before seeing a mortgage broker?

You need to know what questions to ask before seeing, approaching and choosing the right mortgage broker for you. 

“How much can I borrow to buy a home?” is the first question almost always asked. Sure, this question is important, but we recommend you ask questions about your mortgage broker before taking the next steps. 

Three questions to ask your mortgage broker about their services are: 

1. Are you a licensed mortgage or financial broker?
2. How many bank lenders or non-bank providers do you deal with?
3. How do you decide which loan is best suited to my personal situation?

After asking these very important questions, and wishing to proceed with the mortgage or financial broker, then you can ask these questions regarding what is required to get your mortgage or financial application started: 

• How much can I borrow to buy a home? 
• How much money or deposit do I need to put down?
• What schemes or grants am I eligible for? 
• What will my mortgage or financial borrowing costs be?
• What type of mortgage or financial interest rate is best for me?
• What are the comparison rates for home loans?
• When can I lock in the interest rate?
• Is the loan the best one you recommend?

Finding the Right Mortgage Broker

We hope that you have found this guide informative and that this has helped you understand what they do, the services they provide and the benefits that can pass on to you. In the end of it all, your financial journey is your own and you should always choose a mortgage broker that can help you on the path of financial gain and financial freedom. You should choose a mortgage broker you feel comfortable with, where you feel listened to and your concerns are being both validated and accommodated

Why choose Finselect Group as your mortgage broker?

At Finselect we make sure you understand the process every step of the way. We work for you not the bank, not the vendor and not the estate agent. We offer flexible and compelling first home-buyer loan guidance to make your dream home investment a reality.

We take the time to listen to what you need and use our knowledge, experience and strong network within the constantly growing and evolving mortgage and finance space to identify the optimum product for you.

Our market-leading investment loans feature flexible home loan options, fixed rates, flexible rates, standard variable rates and poor credit lending and solutions. Our specialist mortgage and finance brokers can help advise on the available government schemes for first time home buyers for you with you and your goals in mind.

We don’t discriminate. We listen to your story, and we provide tailored solutions for you.

We provide initial no obligation checks that don’t affect your credit rating and take the stress out of borrowing allowing you to enjoy the home-buying process.

Securing finance doesn’t need to be a complex ordeal. We are a finance brokerage service for everyday Australians passionate about educating people on building wealth and paying their mortgages faster. No guesswork, no hassle, just transparent, personalised solutions offering clarity and control to get you and your finances ahead.

We understand that buying your first home can sometimes seem confusing and overwhelming. We offer transparent advice and security and we will never offer you services you don’t need.

We offer simple, no-strings-attached first home buyer options to suit you and your individual circumstances.

We don’t believe in surprises- we offer transparent, accurate and fair lending solutions from our years of experience and knowledge of the constantly growing, evolving financial market to identify the optimum product for you.

Take the Stress out of your new purchasing journey. Contact us today.

Fill in our handy online form. Call us on 1300 346 735 or shoot us an email at info@finselectgroup.com.au.