Mortgage Brokers Sydney

About Sydney mortgage brokers

Headshot of personal finance writer Nicola Field 19 January, 2023
Nicola Field, Personal Finance Writer, Canstar || Fact Checked

A mortgage broker can assist you in the process of applying for a home loan. So, how do you find a good one in Sydney, and what do you need to know?

From its picturesque northern beaches through to its leafy harbourside areas and bustling suburbs to the west, Sydney is traditionally one of Australia’s most competitive housing markets. It has the highest median dwelling price of all our major cities. Whether you’re in the market for a first property, or looking to upgrade to your forever home, then getting a good deal on a home loan may well be on your mind. If you’re looking to buy in Sydney, then working with a mortgage broker may be one way to help find suitable home loan options.

How does a mortgage broker work?

A mortgage broker is someone who connects prospective homebuyers with banks and lenders, so that they can apply for a home loan. A good mortgage broker will get to know your needs, circumstances and finances to get a picture of how best they can assist you. They will then make a recommendation to you for one or more suitable home loans from the ‘panel’ of lenders that they work with.

How can you find a good broker in your area of Sydney?

If you are looking for a broker who knows your local area, one place to start could be a simple internet search. This could assist you with researching the different mortgage brokers in your area, including their relevant accreditation and if there are any positive or negative reviews of their services.

Another way of finding one could be via word of mouth. If you have friends and family who have bought in your part of Sydney, they may be able to recommend a good broker who is aware of the particular needs and requirements of the local area. Likewise, word of mouth may be a good way to learn about any negative experiences that your friends and family have had with brokers.

Moneysmart recommends using a professional mortgage broker association. Bodies such as the Finance Brokers Association of Australia Limited (FBAA) and the Mortgage & Finance Association of Australia (MFAA) both have searchable databases of brokers so you can find a licensed broker in your local area.

Canstar has a detailed list of tips on how to find a good mortgage broker. If you’re in the market for one, there are a number of general questions that are worth asking to find out if the one you’ve found is right for the job. You may wish to ask a broker:

Are they licensed? Licensed mortgage brokers in Australia are bound by certain statutory duties, including a duty to act in the best interests of their clients when recommending loan products. For this reason, Moneysmart advises that you should always make sure a broker is licensed to give you credit advice. The FBAA and MFAA websites can help you find out if a broker is licensed.
How many lenders do they deal with? Mortgage brokers will typically work with a ‘panel’ of different lenders, all of whom will have different home loan options available. There is no hard and fast rule as to how large a panel of lenders should be, but you may feel that the more lenders a broker deals with, the greater the chance that they will find you a good deal.
Do they favour a particular lender? Even if a mortgage broker works with a large panel of lenders, you may wish to ask if the greater proportion of their business goes to any particular lender. If you feel that a broker favours a particular lender over others, and sends a large amount of business to that lender, then you may worry that there are better deals you’re missing out on.
What is their ownership structure? While mortgage brokers in Australia are bound by a statutory duty to act in your best interests, it may still be advisable to ask if a major bank or lender has an ownership stake in their business. If you are concerned that a broker might try and direct your business to a certain bank or institution, then it may be important to you to know that they are independent.
How do their fees and commissions work? Mortgage brokers in Australia are typically not paid upfront. Instead, they get their remuneration in the form of commissions and perks from lenders. It may be important for your peace of mind to ask a broker exactly how they are paid, and if certain banks or lenders offer them more attractive commissions than others.

How does a mortgage broker get paid?

Generally speaking, mortgage brokers in Australia receive payment in three main ways: via upfront commissions, trail commissions and soft dollar benefits. The first two are in the form of direct payments from lenders for referring clients, while the third is paid in the form of perks. Here’s a brief rundown of how these three things work:

Upfront commissions: An upfront commission is a commission that is paid to a broker by a bank or lender, upon successfully signing up a customer for a mortgage. The amount of an upfront commission may vary depending on the financial institution. For example, if a bank pays a 0.5% commission and your mortgage broker signs you up to them with a $1,000,000 home loan, then your broker would make a commission of $5,000 upfront.
Trail commissions: Trail commissions are smaller than upfront commissions, and are time-based. Typically, these kinds of commissions are paid out by lenders to mortgage brokers for each year that a borrower remains on a home loan. Trail commissions are controversial, and the 2017 Banking Royal Commission recommended that they be scrapped, but this has yet to be put into effect, so brokers can still receive them.
‘Soft dollar’ benefits: ‘Soft dollar’ benefits are non-monetary ways for banks and lenders to reward mortgage brokers. One example of such a benefit might be a bank that offers favourable commission rates to brokers in exchange for bringing them business. Another might be ‘perks’, such as dinners or overseas holidays.

If you’re in Sydney and would like to know more about how mortgage brokers get paid, Canstar has a detailed breakdown on the topic.