Do I Need a Mortgage Broker?
If you’re asking yourself, “do I need a mortgage broker?” you’re not alone. With rising property prices, fluctuating interest rates and more loan options than any normal person can get their head around, it really can get overwhelming very quickly. These days, many Australians are still unsure whether to go it alone, speak to a bank, or enlist professional help. However, the right choice can make a big difference to your loan outcome, borrowing power and long-term financial wellbeing.
If you’re looking to build a portfolio, then property experts tell us that the right loan structure alone can be worth millions in the long term.
What Does a Mortgage Broker Actually Do?
In short, a mortgage broker is someone who looks at all available lending options and acts as a middleman between you and the lender. They assess your financial situation and then search their panel of lenders to find a suitable home loan.
Generally speaking, mortgage brokers:
- Gather your financial documents
- Assess your borrowing capacity
- Recommend loan options
- Lodge the application on your behalf
Some brokers offer great service. Others are more transactional. And many people assume all brokers are the same.
They’re not.
What’s the Difference Between Mortgage Brokers and Lending Advisers?
Many people don’t actually realise there’s a difference. Even for this article, we’ve bundled the two together to keep it simple.
But in reality, they are far from the same.
A mortgage broker is typically tied to a limited panel of lenders. Although they have a duty to find a loan that is “not unsuitable”, that doesn’t always mean it’s the best available.
Effectively, they just connect you with a lender and their job is done.
A lending adviser (such as those at Indigo Finance), goes beyond the basics. A good lending adviser will have a full understanding of your profession and consider the full financial picture. That includes not just what you can borrow, but how your loan strategy fits with your lifestyle, future goals, tax implications and investment plan.
It’s very easy to spot a good lending adviser as they very rarely just chase the lowest rate. A good lending adviser focuses on finding the smartest loan for your current and future needs.
When Is It Worth Using a Mortgage Broker?
For a lot of people, if they need a loan, they simply call the bank they’ve been with for longer than they can remember and ask for one.
You’d be surprised how many people shop around for the cheapest fuel, though when it comes to finance, just call (or jump online, or walk into) their local bank. And that really makes no sense at all. Why would you try to save 6c per litre on fuel, but ignore tens of thousands of dollars on getting the best loan structure and interest rate?
It’s also not just about having a mortgage broker go through all the options for you either.
There are definitely times when a broker (or lending adviser) can save you time, money and headaches. A good mortgage broker should take a great deal of stress off your plate and be able to walk you through the entire process.
The most value from a broker often comes to the following types of people:
- Time-poor or overwhelmed by options
- People who have been knocked back by a bank
- Those self-employed or have irregular income
- People who want to understand all their options, not just what the bank offers
- People who have specific goals and need someone to help them navigate the options
As an example, let’s just say you were denied a loan by your long-time bank due to inconsistent freelance income. We’ve seen countless examples where it’s possible to still be approved through a lender that understands that situation. Not only that, many people are shocked to find that not only can they be approved, they can even find a better rate, with a loan structure that’s more advantageous than before.
The Pros and Cons of Using a Mortgage Broker
Knowing what we know about lending, there’s no way we’d ever suggest you try to arrange your own loan directly with a bank. It’s incredibly complex and there’s no way you could ever know if the loan you are getting is actually the best (and most appropriate for you) in the market today. Having said that, there are a few reasons not to use a mortgage broker. However, those reasons usually relate to one specific mortgage broker and not mortgage brokers as a whole.
Pros of using a mortgage broker:
- Access to a broader range of lenders
- Tailored advice
- Help with paperwork and applications
- Potential to get better rates or features
- Done for you
- Significantly less stress
- Faster and more efficient
Cons of using a mortgage broker:
- Some brokers only work with a narrow lender panel
- Not all brokers prioritise strategy
- Quality and transparency varies
To be fair, it can often be very hard to sort through potential mortgage brokers and in many cases, how would you know if you were working with a good broker or not?
How Mortgage Brokers Get Paid
Most mortgage brokers are paid by the lender, not you.
So effectively, you pay $0 out of pocket to have an expert walk you through every step of the lending journey.
This happens because mortgage brokers receive an upfront commission and sometimes a trailing commission based on your loan amount.
It doesn’t increase the cost of your loan. You’d get exactly the same deal if you went direct with the lender. It’s just that the commission would remain in house, rather than being paid out to a mortgage broker.
This can work well if the broker puts your interests first. But be wary. If they’re pushing a particular lender or loan, ask why. At Indigo, we disclose all commissions and focus on long-term results, not quick wins.
Questions to Ask if You’re Wondering “Do I Need a Mortgage Broker”
Are they licensed and qualified?
Check if they hold an Australian Credit Licence or are an authorised representative. Seems obvious, but never assume. This step will take you only a few minutes at most.
How many lenders do they work with?
A broker working with just five banks isn’t offering you much choice. Aim for someone with access to 20+ lenders.
How are they paid, and by who?
Transparency is key. Ask if they charge a fee and how commissions are handled. Good brokers will be open and honest about this. If there is hesitation, or a clever answer that avoids the question, that’s a red flag.
Can they show examples of past outcomes?
A good broker will share stories (with permission) of clients they’ve helped and why certain strategies worked. Great brokers will share stories that have similarities to your circumstances, goals and needs.
A good mortgage broker should save you money, headaches and make your life a lot easier.
Do I Need a Mortgage Broker if I Can Go Direct to a Bank Instead?
Given there are literally hundreds of different loan products available from countless lenders, why would you limit yourself to only look at one bank’s offerings? Banks only sell their own products. So of course they want you to feel comfortable and believe that they have the right loan for you. But really, what it means is:
- Limited options
- Less flexibility with complex scenarios
- No one representing your best interest in the process
Some buyers feel comfortable going direct. But even experienced investors can often miss smarter loan structures that a lending adviser would catch.
How to Find a Good Mortgage Broker (Or Lending Adviser)
- Ask for referrals from people you trust
- Read online reviews
- Interview a few before choosing
- Look for someone who asks about your goals, not just your income
- Ask yourself if they seem keen to add value when you talk, or if they are looking for a “sale”
Do I Really Need a Mortgage Broker?
The short version? It depends.
If you want the confidence of knowing you’re making a smart, strategic financial decision that supports your life goals, then the right lending adviser can be worth their weight in gold.
If you’re just chasing a rate and feel confident doing your own research and paperwork, going direct might work for you.
But for most Australians, especially in today’s complex lending environment, professional advice isn’t a luxury. It’s a smart move.
Are you still wondering, “Do I need a mortgage broker?” Let’s chat.
Click here to book a discovery call and get clarity on your next steps. Ask us difficult questions to see if we’re a good fit for each other.
