Mortgage Brokers Adelaide

Mortgage Brokers in Adelaide

If you’re in the market for a home or investment property in Adelaide, or you’re looking to refinance an existing home loan, a mortgage broker is one option to consider.

Shopping around for a home loan has always been important, as finding a good home loan can make a crucial difference to your broader finances. Thankfully, borrowers have a massive amount of choice when looking at lenders—for example, Canstar’s database of home loan providers extends to over 90 different lenders. But this array of choice can seem overwhelming and many borrowers seek out the support of a mortgage broker to help them narrow down their options.

However, it still pays to do your own home loan research. As we’ll see, mortgage brokers don’t work with every lender in the market.

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How does a mortgage broker work?

A mortgage broker is a finance professional whose job is to connect borrowers with lenders. They represent the borrower and must work in their best interests, but they also work closely with lenders. For some banks and other home loan providers, mortgage brokers are a key sales channel for their products.

If you choose to go through a mortgage broker, they will typically start by identifying your needs and financial goals, and advise if you’re in a position to take out a home loan. From there, the broker will recommend some suitable home loans from the range of lenders they work with.

The key point of appeal for many borrowers is that a mortgage broker will do some of the work of taking out a home loan on your behalf. For example, they will help you complete the loan application, submit it to the lender for you, and respond to any queries the lender may have. Some mortgage brokers may even go the extra mile, and help you apply for various schemes such as the First Home Owner Grant which some buyers in Adelaide may be eligible for.

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How many lenders can I access through an Adelaide mortgage broker?

Mortgage brokers in Adelaide, as elsewhere, do not work with every lender in the market. Rather, they help you find a home loan from the selection of lenders they partner with. This is known as their ‘panel’ of lenders.

The number of lenders on an Adeldaide mortgage broker’s panel varies widely. The big mortgage broking franchises can have over 30 different lenders on their panel, with some also offering their own brand of home loans.

Smaller brokers may have as few as 10 lenders on their panel, which can limit the range of lenders and loans you have access to. The potential upside of using a small broker is that they may offer a more personalised service, give niche advice for specific kinds of borrowers and have strong knowledge of the local market in particular parts of Adelaide.

How much does a mortgage broker in Adelaide cost?

Mortgage brokers in Adelaide, and anywhere else in Australia for that matter, usually do not charge borrowers. Instead they are generally paid a commission by the lender you choose when you successfully apply for a home loan.

Mortgage brokers in Adelaide can receive two main types of commission from lenders:

Upfront commissions

An upfront commission is paid to the broker by a bank or lender when you, the borrower, first take out a home loan.

How much the broker receives depends on the lender involved. If a bank pays, say, a 0.5% commission and your mortgage broker signs you up to them for a $500,000 home loan, your broker would make a commission of $2,500 upfront. Remember, though, you as the borrower don’t have to pay this. The commission is paid by the lender.

Trail commissions

Trail commissions are smaller than upfront commissions, but are paid out periodically. In some cases, a bank or lender will pay a trail commission to a broker for each year that a borrower remains on the same home loan product.

How do I find the best Adelaide mortgage broker?

Over 1,000 mortgage brokers operate across South Australia, so chances are wherever you live in Adelaide you will have a selection of brokers to choose from.

You can narrow down the search by asking friends, family or work colleagues for their recommendations of a mortgage broker in your part of Adelaide. Referrals can be especially helpful if you’re looking for a broker with particular experience—for example, working with borrowers who are self-employed or advising borrowers who hope to buy a home with a low deposit.

Online reviews can also be a useful tool to check if a mortgage broker has delivered on their promise of great service.

The Federal Government’s Moneysmart website also suggests that those who are in the market for a mortgage broker can search for one through a professional association. The Finance Brokers Association of Australia Limited (FBAA) and the Mortgage & Finance Association of Australia (MFAA) both have websites with searchable databases of licensed brokers, so you can find one in Adelaide based on your postcode.

Questions to ask a mortgage broker in Adelaide

There are a number of key questions you might consider asking to find out if a broker is the right person for the job. You may ask a broker:

Do they hold a licence? It’s important that anyone doing business as a mortgage broker in Australia is licensed to give credit advice. Licensed brokers are bound by statutory duties, and foremost among these is a duty to act in the best interests of their clients when recommending loan products. If you’re wondering whether a broker is licensed, you can enquire with a professional body such as the FBAA or MFAA.

How experienced is the broker with helping other Adelaide borrowers? Using a broker with extensive experience of the Adelaide market may be an advantage. For example, they may have an immediate sense of your borrowing needs based on the suburbs you are looking at.

How do their fees and commissions work? Mortgage brokers in Australia typically do not receive upfront payment from clients. Instead, they’re paid in the form of commissions and other perks from banks and lenders. You may wish to ask your broker how they’re paid, and if certain lenders offer more attractive remuneration than others.

How many lenders do they deal with? There’s no hard and fast rule as to how many lenders should be on a broker’s panel. Indeed, a broker may have a small number of quality options for you or a large number of unsatisfactory ones. Even so, you may feel that the more lenders a broker deals with, the greater the chances that they will find you a suitable home loan deal.

Do they favour a particular lender? If a mortgage broker sends the greater proportion of their business to one particular lender, you may wish to know why and if they’re rewarded in some way for doing so. Even though brokers are required to act in your best interests and offer you a suitable home loan option, you may be concerned that there’s an even better deal out there that you’re missing out on if your broker favours one lender over another.

What is their ownership structure? When assessing a mortgage broker, it may be worthwhile asking if a major bank or lender has an ownership stake in their business. You may be concerned that the broker will try and direct your business to this particular institution, causing you to miss out on an even better home loan deal if one is available elsewhere. Likewise, it may be important to you to know that your broker is independent.

What post-settlement services do you provide? Mortgage brokers in Adelaide will be keen to help you organise a home loan, but for some their services don’t end there. Some brokers go a step further by conducting an annual review of your loan to make sure it still meets your needs. They may even contact the lender on your behalf to negotiate a rate discount. It’s worth asking what sort of service your broker will provide after your home loan has settled, as it can help you remain confident that your home loan will meet your future needs.

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About the author

Nick is a Content Producer at Canstar, providing assistance to Canstar’s Editorial Finance Team in its mission to empower consumers to take control of their finances. He has written hundreds of articles for Canstar across all key finance topics. Coming from a screenwriting background, Nick completed a Bachelor of Film, Television and New Media Production from Queensland University of Technology. Nick has also completed RG 146 (Tier 1), making him compliant to provide general advice for general insurance products like car, home, travel and health insurance, as well as giving him knowledge of investment options such as shares, derivatives, futures, managed investments, currencies and commodities. Nick’s role at Canstar allows him to combine his love of the written word with his interest in finance, having learned the art of share trading from his late grandfather. Nick strives to deliver clear and straightforward content that helps the everyday consumer navigating the world of finance. Nick is also working on a TV series in his spare time. You can connect with Nick on LinkedIn.