How to choose a broker

According to the Genworth Financial Mortgage Trends Report 2009, 40 per cent of all Australian borrowers now use brokers and for very good reasons - not only can they help you evaluate your borrowing capabilities and arrange finance for your property, their insight on the market can be invaluable. In addition, they can also arrange other services associated with your property purchase.

When speaking with your broker to arrange your financing there are a number of key points to consider. First and foremost, you need to remember that you should set your own borrowing limit.

While banks will assess your ability to service a mortgage based on your salary, other financial commitments and credit history, and give you a maximum borrowing amount, you need to feel comfortable that you can afford to meet loan repayments - which may mean borrowing a smaller amount.

Why do people choose brokers?

The Mortgage Trends Report highlighted that most people choose brokers to save time and get a better deal. In some cases a broker is chosen to investigate a number of product alternatives, as they are perceived to have a wide knowledge of specials and discounts from a panel of lenders that may best suit your individual circumstances. In other cases, particularly for first home buyers, brokers are chosen to help navigate through the home buying purchase, and provide a range of advice.

Where do I find a broker?

There are many ways to find a broker, according to the Report, however over 30% who used a broker are referred through family or friends. Reach out to your networks and see if you can get a recommendation from someone you know, which is likely to increase your level of trust.

Do brokers make commissions?

Yes. The majority of brokers are paid commissions by lenders, whether it be an up-front fee, a trail commission based on a fixed percentage of the loan balance, or both. Actual fees vary from lender to lender, fees which have recently been reduced by most lenders over the last few months. If you are concerned with the commissions your broker may be earning, ask them up-front – they are required to disclose to you of any commissions they may be earning to avoid any conflict of interest.