A mortgage broker is a finance professional who helps consumers take out home loans with lenders. As such, mortgage brokers act as middlemen between consumers and lenders.
The job of a mortgage broker is to discover a consumer’s unique financial circumstances and goals, and then recommend the most suitable home loan products.
The most suitable home loan product isn’t necessarily the one with the lowest interest rate – although interest rate is certainly one of the main factors that mortgage brokers consider. Mortgage brokers also weigh up other factors such as the loan’s features and fees, as well as the quality of the lender’s customer service.
Mortgage brokers need to be accredited with a lender to do business with that lender. Mortgage brokers generally have affiliations with anywhere from 10 to 30 lenders. This would typically include the big four banks, leading second-tier lenders and several low-profile lenders.
Generally, mortgage brokers don’t charge consumers for their services. Instead, mortgage brokers earn money by receiving commission payments from lenders every time a lender signs a home loan agreement with a client introduced by the mortgage broker.
These commission payments are a percentage of the loan. For example, if a mortgage broker helped a client take out a $500,000 loan and the lender in question paid an upfront commission of 0.65 per cent, the mortgage broker would receive $3,250 from that lender.