Mortgage brokers

Mortgage brokers can help you find the right loan, but you should beware of untrustworthy brokers. The brokage industry doesn’t have an industry regulator (unlike real estate agents).

Things to look out for

You will need to be very careful when you look for a broker.

Be careful of brokers who:

• recommend the loan that gives them the biggest commission
• only recommend their own products (if they’re affiliated with a lender)
• make you pay for any loan offer they find for you, even if it doesn’t suit your needs.

Questions to ask

The following questions can help you decide if a broker is upfront, professional and independent.

Upfront

• Do you know exactly what you’re agreeing to when you sign up?
• Does the broker explain all fees and commissions before you sign up? The fee should be no larger than about 2% of the loan amount.
• Will they give you a copy of any application forms, or anything else they send to lenders for you?
• Does the broker expect an upfront fee? Reputable brokers do not.

Professional

• What qualifications or courses has the broker done? Some lenders will only ‘accredit’ mortgage brokers to sell their own products.
• Can they justify their recommendations?
• Do they belong to a reputable industry association?
• How secure is any personal information you give them?
• Does the broker have a process to resolve disputes?
• Do they have professional indemnity insurance?
• Will you be comfortable if they come to your home? Some brokers will exploit your politeness to improve their chances of a sale.

Independent

• Is the broker independent or do they only deal with a certain lender?
• Do they offer a wide range of loans from a variety of independent lenders?
• Is the broker a lender as well? This may affect their recommendations.