Using a broker
The go-between
With so many different lenders and credit providers to choose
from, you may decide to get a finance or mortgage broker to do the
legwork for you. Brokers can help you find out about suitable loans
or credit packages and arrange special deals.
As with any adviser, it is wise to shop around. Do some checking
yourself to make sure the loan is suitable and competitive - or you
could end up paying more than you need to.
What brokers do
A finance broker negotiates with banks, credit unions and other
credit providers on your behalf to arrange loans. A mortgage broker
is someone who specialises in home loans.
Smart tip
Brokers do not have access to all credit providers' loans, so
shop around yourself to see what other deals are out there.
Finance or mortgage brokers can offer you a variety of loan
options. They can help you select a loan and manage the process
through to settlement.
But brokers may be limited to a particular range of products
that might not suit your needs or give you the best value for your
money.
For example, if a credit provider doesn't pay commissions, the
broker might not include their loans on the list of products they
recommend.
Who pays the broker?
A broker's fee or commission for arranging a loan is often
paid by the credit provider whose products they sell.
Different credit providers pay different commission levels. This
can potentially influence what loans the broker recommends to you.
Sometimes a broker will charge you a fee directly (instead of, or
in addition to, the credit provider's commission).
Find out the fee structure for the broker's service, and compare
fees charged by different brokers to make sure you get a good
deal.
Things to check when using a
broker
If you use a broker, do the following.
Check that the broker is licensed
Credit providers and brokers that are not licensed are
operating illegally in Australia. Make sure you only deal with
a company or person who is licensed.
Search ASIC Connect's Professional Registers to
check your credit provider has been licensed or you can
phone ASIC's Infoline on 1300 300 630.
Find out more about the law and consumer credit
regulation.
Find out who you're dealing with
Some people think they are dealing with the lender or credit
provider directly, when in fact they are dealing with a broker. If
you're not sure, ask who the credit provider or lender is. Consider
if there are any conflicts of
interest in the advice you are given.
Find out from your broker exactly what loans they offer, who
pays their commissions and if they will charge you a fee.
Make a wish list
Make a list of what you want and ask your broker to find a loan
that meets as many of these requirements as possible. Also find out
what it will cost to have these features. Ask your broker about
other home loans or credit packages if you are not satisfied with
their recommendations.
Shop around
Look at other loans online or phone other brokers to check what
they charge and what they offer to do.
Get a written agreement from the broker
A written agreement should tell you the type of loan being
arranged for you, the amount of the loan, the term of the loan, the
current interest
rate, and any fees
you have to pay. The fees could include broker's fees or
commissions, fees to the credit provider or lender for setting up
the loan, and/or any early termination fees.
Never sign blank forms or leave details for the broker to fill
in later. If you feel like you're being pressured into signing
something, ask for more time to think about the loan.
Warning about business purpose declarations
Do not sign a business purpose declaration unless you are really
using the loan for business and are eligible to claim your
repayments as a business expense for taxation purposes. By signing
the declaration, you may lose valuable rights under the National Credit Law.
Complain if something goes wrong
If you have a complaint about a broker or a dispute you can't
resolve, find out how to complain or phone ASIC's
Infoline on 1300 300 630.
A finance or mortgage broker can save you time
and money, but you should still do your own research. Be prepared
to ask plenty of questions to help your broker find you a loan that
meets your needs and offers value for money.
Related links
Last updated: 06 Oct 2017
