What does a mortgage broker help you with?
Depending on your circumstances, a mortgage broker may help with:
- understanding your lending objectives
- reviewing income, expenses, liabilities and assets
- assessing indicative borrowing capacity
- considering lenders available through their lender panel
- understanding relevant lender policies
- comparing suitable loan options
- explaining rates, fees and loan features
- considering loan structure
- preparing and submitting an application
- communicating with the lender during assessment
- helping manage the process through to settlement
- reviewing lending after settlement where appropriate
How the regulator describes the role
ASIC's Moneysmart describes a mortgage broker as a go-between who deals with banks and other lenders to arrange a home loan.
What happens when you first speak to a mortgage broker?
A useful first conversation should start with you — not with a particular lender. The broker needs to understand what you're trying to achieve. Depending on the lending scenario, this may include discussing:
- whether you're buying, refinancing or investing
- the amount you may need to borrow
- your deposit or available equity
- your income
- existing debts and commitments
- your regular expenses
- your preferred loan features
- your expected timeframes
- your future plans that may be relevant to the lending decision
Why the order matters
The purpose is to build an accurate picture of your circumstances before considering lending options. Starting with a product and working backwards tends to produce a loan that fits the lender rather than the borrower.
Does a mortgage broker calculate how much I can borrow?
A broker can assess your circumstances and provide an indication of borrowing capacity based on relevant lender requirements and servicing methodologies. But borrowing capacity isn't one universal number.
Different lenders can assess the same borrower differently because their policies, servicing calculations and treatment of income and commitments can vary. A broker may therefore consider how your circumstances fit with different lenders available through their lender panel.
The maximum amount a lender may be willing to provide also isn't necessarily the amount you should borrow.
Does a mortgage broker compare different lenders?
A mortgage broker can consider options from multiple lenders available through their approved lender panel. This is different from approaching a single bank directly, where the discussion will generally focus on that institution's own lending products.
However, brokers do not necessarily have access to every lender or every home-loan product in Australia. The lenders available depend on factors including the broker's lender panel, accreditations and aggregator arrangements.
Rove Financial considers relevant lending options available through its lender panel.
How does a mortgage broker choose a lender?
It shouldn't simply be a matter of finding the lowest advertised interest rate. Depending on the circumstances, relevant considerations may include:
- lender eligibility
- borrowing capacity
- credit policy
- income treatment
- loan-to-value ratio
- property type
- loan purpose
- interest rate
- fees
- loan features
- repayment structure
- lender serviceability
- application requirements
- the borrower's objectives and circumstances
Rate matters, but it isn't the whole assessment
A competitive interest rate can be important, but it is only one part of assessing a home loan. A low advertised rate is of little use if the loan doesn't suit the borrower's circumstances or the borrower doesn't satisfy the lender's requirements.
Does a mortgage broker have to act in my best interests?
Australian mortgage brokers are subject to statutory best interests obligations when providing relevant credit assistance to consumers. The National Consumer Credit Protection Act 2009 requires mortgage brokers within the scope of those provisions to act in the consumer's best interests when providing credit assistance. Where a relevant conflict exists, consumer interests must be given priority.
ASIC's Regulatory Guide 273 provides guidance about these obligations. Importantly, these obligations are about the process and priority applied to the consumer's interests. They are not a guarantee of the cheapest loan, the lowest rate, loan approval or any particular financial outcome.
What documents does a mortgage broker need?
The documents required depend on the borrower and lending scenario. A broker may need information or evidence relating to:
- identification
- employment
- income
- bank accounts
- existing loans
- credit cards
- living expenses
- savings
- deposit
- assets and liabilities
- existing properties
- proposed property purchase
Self-employed applicants
Self-employed applicants may need additional financial information depending on the lender and application. The exact documentation requirements vary between lenders and circumstances.
What does a mortgage broker do with my information?
A broker uses relevant information to understand your circumstances, assess lending options and assist with the credit application. Personal and financial information should be handled in accordance with applicable privacy, credit and regulatory obligations.
Our privacy policy and credit guide set out how we handle information and how we are licensed and authorised.
Does a mortgage broker submit the home-loan application?
A mortgage broker can assist with preparing and submitting a loan application to the selected lender. This can involve:
- gathering required information
- checking supporting documents
- completing application information
- providing relevant supporting material
- responding to lender requests
- communicating with the lender
- keeping the borrower informed
Who makes the decision
The lender — not the mortgage broker — makes the lending decision. Credit remains subject to lender approval and applicable lending criteria.
What happens after the application is submitted?
The lender assesses the application. Depending on the application, this may involve:
- verifying information
- reviewing income and expenses
- assessing serviceability
- reviewing credit history
- considering the proposed security property
- requesting further information
- completing a property valuation
- assessing the application against lender policy
The broker's role during assessment
The broker can help manage communication between the borrower and lender during this process. The lender ultimately decides whether the application is approved.
Does a mortgage broker help with pre-approval?
A mortgage broker can assist with an application for home-loan pre-approval where appropriate. Pre-approval can provide an indication of what a lender may be prepared to lend based on the information assessed at that time.
However, pre-approval is not the same as unconditional or final approval, and it remains subject to the lender's requirements.
Does a mortgage broker help first-home buyers?
Yes. A broker can help a first-home buyer understand lending considerations such as:
- borrowing capacity
- deposit requirements
- LMI
- available loan structures
- lender requirements
- the loan application process
Government programs
Government programs may also be relevant depending on eligibility. A mortgage broker does not determine eligibility for government programs and cannot guarantee loan approval.
Can a mortgage broker help with refinancing?
Yes. A broker can review existing lending and consider refinancing options available through their lender panel. That doesn't mean refinancing will always be appropriate. Relevant considerations may include:
- current interest rate
- remaining loan balance
- loan features
- switching costs
- available alternatives
- loan term
- overall loan structure
- the borrower's objectives
Sometimes staying put is the answer
Sometimes refinancing may be appropriate. Sometimes remaining with the existing lender may be appropriate. The point of the review is to work out which applies to you.
Can a mortgage broker help self-employed borrowers?
Yes. Self-employed lending can involve additional considerations around how income is evidenced and assessed. Different lenders may treat business income and financial information differently.
A broker can help understand the applicant's circumstances and consider relevant lending options available through their lender panel. Approval remains subject to lender criteria.
Can a mortgage broker help property investors?
Yes. Mortgage brokers can assist with investment-property lending. Depending on the investor's circumstances, relevant considerations may include:
- borrowing capacity
- existing debts
- rental income
- available equity
- loan structure
- interest-only versus principal-and-interest repayments
- lender policy
- future borrowing objectives
Structure compounds over time
Loan structure can become increasingly important as a property portfolio grows.
How does a mortgage broker get paid?
Mortgage brokers are commonly paid commissions by lenders when loans settle. This may include an upfront commission and an ongoing or trail commission. In some circumstances a broker may also charge a direct fee.
Applicable commissions, fees and other required information should be disclosed through the relevant credit documentation. Moneysmart recommends that consumers ask brokers how they are paid and whether remuneration differs between lenders.
What doesn't a mortgage broker do?
A mortgage broker cannot:
- guarantee loan approval
- make the lender approve an application
- guarantee the lowest interest rate
- guarantee how much you can borrow
- guarantee property values
- provide tax or legal advice unless separately qualified and authorised to do so
Where the role begins and ends
The broker's role is to provide credit assistance and help navigate lending — not to control the lender's final decision.
What questions should I ask a mortgage broker?
Useful questions include:
- Which lenders can you access?
- Are there lenders you cannot access?
- Why are you recommending this option?
- What other options did you consider?
- What will the loan cost?
- What features does the loan include?
- How are you paid?
- Are there any fees payable directly by me?
- What happens after the application is submitted?
- What support do you provide after settlement?
How Rove Financial approaches mortgage broking
At Rove Financial, we start by understanding what you're trying to achieve before considering a lender. We review your circumstances and consider relevant lending options available through our lender panel. The objective is to help you understand:
- your lending position
- the options considered
- relevant trade-offs
- how the proposed loan works
- what happens next
Where we work
Rove Financial provides mortgage and finance broking services to clients across Australia, subject to applicable lender availability, lending criteria and regulatory requirements.
Frequently asked questions
What does a mortgage broker actually do?
A mortgage broker helps borrowers understand their lending position, consider suitable options available through the broker's lender panel and navigate the home-loan application process.
Is a mortgage broker the same as a bank?
No. A bank generally provides its own lending products. A mortgage broker can provide credit assistance in relation to products from multiple lenders available through the broker's lender panel.
Does a mortgage broker approve my loan?
No. The lender makes the lending decision. A mortgage broker assists with the application and communication process.
Can a mortgage broker tell me how much I can borrow?
A broker can provide an indication based on your circumstances and relevant lender requirements, but actual borrowing capacity varies between lenders and remains subject to lender assessment.
Does a mortgage broker have access to every lender?
No. Brokers generally work with an approved lender panel. Available lenders vary depending on panel arrangements and accreditations.
Do mortgage brokers have to act in my best interests?
Australian mortgage brokers are subject to statutory best interests obligations when providing relevant credit assistance to consumers.
How do mortgage brokers get paid?
Mortgage brokers are commonly paid commissions by lenders. Some brokers may also charge direct fees in certain circumstances. Applicable remuneration and fees should be disclosed.
Can a mortgage broker help after settlement?
Depending on the broker's service model, they may provide ongoing support or reviews after settlement.
General information only. This information does not take into account your objectives, financial situation or needs. Lending criteria, rates, fees, products and eligibility vary between lenders and may change. Rove Financial considers lending options available through its lender panel and does not represent that it compares every lender or product in the Australian market. Credit is subject to lender approval and applicable lending criteria.