Do I Have to Pay a Mortgage Broker?

Whether you are applying for your first ever home loan, refinancing an existing mortgage, or just toying with the idea of leaving units and rent behind in favour of a place to truly call your own, mortgage research can be overwhelming.

Homeownership is a monumental step for many and one that requires some degree of financial sacrifice for most. As you navigate the world of mortgages, be it your first time or your fifth time, you will undoubtedly benefit from a broker’s mortgage advice and expertise.

However, you might be hesitant to engage their services for fear that you may already struggle to make a down payment, much less pay for additional services when applying for your mortgage. Wondering if you have to pay a mortgage broker is a common question for many first-time mortgage applicants in Australia. Spoiler alert: there is good news ahead!

Do You Have to Pay Mortgage Brokers?

In most cases, you will not have to pay a mortgage broker for their services.

Instead, brokers make their money via commissions paid directly by the lenders. They may be incentivised by one flat fee, regardless of the loan products they recommend, or lenders may sometimes pay them more for recommending a specific loan option.

Do Mortgage Brokers Charge Upfront Fees?

Even though most brokers are paid by the mortgage lender, a small percentage of them will charge a broker fee to the borrower. Ask any mortgage broker about this from the start, so you are not surprised later in the process by a broker fee you were not expecting.

A reputable mortgage broker will always be completely transparent about fees, so if your questions as a home buyer are met with any hesitation, you should move on to another mortgage broking service.

Does it Cost Money to Talk to a Mortgage Broker?

An initial, exploratory conversation with a broker should never cost the borrower anything. If someone wants a fee just to answer a few questions or learn more about your mortgage needs, move on to another broker.

How Much Do Most Mortgage Brokers Charge?

The good news for borrowers looking to engage the services of a mortgage broker is that most of them do not charge a fee for their services; instead, they work on a commission basis with various lenders.

What Is a Fee Free Mortgage Broker?

A fee free mortgage broker only receives payment in the form of a commission rate from lenders. This is the easiest way to direct your questions to potential mortgage brokers. Ask them in the first conversation if they operate as fee free mortgage brokers to ensure you won’t be hit with any surprise fees after engaging their services.

In addition to inquiring about fees, verify that the broker is appropriately licensed. One easy way to find this information online is using the Australia Securities and Investments Commission’s (ASIC) searchable registers. In Australia, a mortgage broker must carry an Australian Credit Licence (ACL) if offering credit assistance services.

Do You Have to Pay a Mortgage Broker if You Don’t Buy?

While a good mortgage broker does not charge borrowers and receives a commission rate from the mortgage lender, you may wonder about a scenario when the borrower does not move forward with a mortgage. What happens then?

This type of scenario is what you might consider part of the cost of doing business for a mortgage broker. Similarly, you might think of a real estate agent who shows 23 houses to a young family and does not purchase them.

Like other incentivised positions, mortgage brokers accept that risk with every potential client and financial situation.

Can a Mortgage Broker Get You More Money?

Now that we have spent some time looking at the money that lands in the hands of the broker, we will shift gears to what is most important to the borrower: the money that lands in her hands to buy a new home.

After all, why would we consider working with mortgage brokers rather than trying to find a home loan on our own?

Beyond the fact that brokers offer excellent advice along the way, they also have access to help consumers secure better loans, whether that means the loan amount or its terms and conditions.

Working with a mortgage broker offers numerous benefits, including that they do most of the legwork for borrowers and also spend time comparing and analysing loans, so you don’t have to, which can be a great relief to those overwhelmed by all the terminology associated with borrowing.

As long as you are working with a qualified, licensed, and reputable broker, you can count on the experience being a positive one. A transparent broker is not only open about your options but also about his services and payments.

Do Brokers Have to Disclose Commission?

Under Australian law, brokers must disclose commissions and fees and adhere to fair business practices and many other regulations.

What Percentage of Mortgages Are Through Brokers?

If you are still on the fence about whether or not to use a broker, consider that typically two-thirds of all mortgages in Australia are facilitated by brokers. This statistic speaks to the effectiveness of working with brokers, whether it is your first mortgage, a refinance, or a beach pad for vacations.

Who Pays the Mortgage Lender?

The borrower will make payments directly to the lender once the mortgage is agreed upon; you will not funnel the payments through the broker, who acts only as a middleman to help you find the right lender. Once the loan is secured, the payment arrangements are made directly with the lender.

If you are ready to find out more about the services of mortgage brokers, Zanda Wealth has a team of dedicated professionals who are passionate about helping clients realise their dreams of home ownership. Contact us today to set up a free strategy session, moving you closer to owning a home.