A mortgage broker is basically the go-between for home loans. This means that a mortgage broker liaises with a lender on your behalf, helps you to negotiate a better home loan deal, and assists you with your application from start to finish. A mortgage broker also simplifies the home loan process and makes buying a home loan less frustrating.
In most cases, the mortgage broker is paid a commission for arranging your home loan application. This commission is paid by the lender who you are applying for a home loan with. However, in most cases, the mortgage broker is not paid at the time of the application. They are only paid when your home loan application is approved with the lender and you become a mortgage holder with this lender.
Commissions that are paid to mortgage brokers differ depending on the lender the home loan application is lodged with. Some lenders pay higher commissions than others, and in some cases this may encourage a broker to recommend a particular home loan product. This is why it is important to ask a mortgage broker about their commissions when comparing home loan products.
It is also important that you ask a mortgage broker about their service charges. As in some cases, a broker will charge you an upfront fee to use their service. This fee is in addition to the commission that they will receive from a lender.
Mortgage broker commissions are typically paid on a month-to-month basis over the term of your home loan. The fee paid is usually a percentage of the total home loan value that you have elected to take out with a lender.
If you decide to use a mortgage broker’s service, then make sure you ask them about the commissions they receive. If possible, see if the broker can include these commissions in the home loan product comparisons that they offer you. This way you are ensured that the mortgage broker is offering you objective information based on you and your circumstances and on what is best for you financially, rather than subjective information that is dictated to by the higher commission that they will earn.
Shop around and compare fees and services before you use a mortgage broker. Ask about commission levels and if they charge you a fee. Also ask about their range of home loan products and how many lenders they have on their panel. A good mortgage broker will have a vast selection of home loan products from a variety of lenders, whereas a new, inexperienced mortgage broker may have a very limited choice.