Damon Mcknight
Choosing a mortgage broker in Australia can be a tricky process. It is important to do your research and select a broker who is experienced, qualified, and aligned with your financial goals. A good place to start is by checking their qualifications and whether they are licensed to provide loan services. You can also look at whether they are a member of any broker clubs or tiered service arrangements. Australians can also turn to the Mortgage and Finance Association of Australia (MFAA), which has a network of over 15,500 members, to find a broker nearby. It is also recommended to shop around and compare different brokers, as well as understanding their payment structures, to ensure you find the best fit for your needs.
| Characteristics | Values |
|---|---|
| Number of mortgage brokers in Australia | Over 15,000 |
| Percentage of new residential home loans settled by mortgage brokers | 76% (highest on record) |
| Qualifications | Certificate IV in Finance and Mortgage Broking |
| Memberships | Mortgage and Finance Association of Australia (MFAA) |
| Average number of lenders on a broker's panel | 9-50 |
| Commission | Paid by the lending institution, not the borrower |
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What You'll Learn
Qualifications and experience
When looking for a mortgage broker in Australia, qualifications and experience should be at the top of your checklist.
The minimum qualification required in Australia for a mortgage broker is a Certificate IV in Finance and Broking. This qualification meets the education requirements outlined in ASIC's RG 206. Representatives offering mortgage broking services must also undertake 20 hours of Continuing Professional Development (CPD) each year to remain compliant under RG 206.
To be a member of the Mortgage and Finance Association of Australia (MFAA), brokers must obtain a Diploma in Finance and Mortgage Broking Management. The MFAA is the peak body recognised by the government, regulators, and industry leaders. It sets the benchmark for mortgage broking professionalism and offers its members exclusive resources, advocacy, and industry support.
The Finance Brokers Association of Australia (FBAA) is another major association for mortgage brokers in Australia. Both the MFAA and FBAA impose strict requirements for membership and offer continuing professional development, such as mentorship for new brokers.
In addition to qualifications, a broker's experience is also important. A good broker will be on top of all the best rate-related mortgage products and should be able to provide you with the best option. They should also be able to explain how each loan option works, what it costs, and why it's in your best interests.
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How they get paid
Mortgage brokers in Australia are typically paid on a commission basis by the banks and lenders that provide the home loans. This arrangement doesn't usually cost the borrower directly. While most mortgage brokers in Australia work on commission, some charge clients a fee for their services instead of, or in addition to, receiving commissions from lenders.
There are two main types of commission: upfront and trailing. Upfront commissions are one-time payments made by the lender when a loan is settled, and average around 0.65%–0.70% of the loan amount plus GST. A trailing commission is a smaller, ongoing commission calculated as a percentage of the remaining loan balance, typically around 0.15%–0.275% of the loan value.
Some brokerages offer mortgage brokers a base salary to provide stability and a safety net, which can range from $45,000 to $130,000 per year. Lower base salaries have lower targets and higher trailing commissions, while higher base salaries have higher targets and no trailing income.
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Their lender panel
When choosing a mortgage broker in Australia, it is important to consider the lender panel they work with. A lender panel refers to the group of financial institutions that a broker has established relationships with and can offer loan products from. Different brokers will have different lender panels, so it's worth considering the following factors to ensure you're getting the best service and loan options for your needs.
Firstly, the size and diversity of the lender panel matter. A broker with a large and diverse panel has access to a wider range of loan products, which increases the likelihood of finding a loan that suits your specific needs. This is particularly important if you have unique circumstances or requirements that may not be met by mainstream lenders. A diverse panel should include a mix of major banks, online lenders, credit unions, and specialist lenders, ensuring a broad range of options.
Secondly, consider the quality and reputation of the lenders on the panel. While having a large panel is beneficial, the value comes from the quality of the lenders included. Look for brokers that work with reputable and well-known lenders that have a strong track record of providing competitive rates and customer satisfaction. It's also worth checking if the broker has access to exclusive deals or rates from these lenders, as this can further enhance the value of using their service.
Thirdly, assess the broker's independence and impartiality. A good broker will offer unbiased advice and act in your best interests, rather than pushing products from specific lenders. They should be transparent about their lender panel, allowing you to understand the full range of options available. While some brokers may have closer relationships with certain lenders, ensure they are still acting independently and offering the most suitable loan for your circumstances.
Finally, keep in mind that the best lender panel for you will depend on your individual needs and circumstances. For instance, if you have a unique employment situation or are seeking a specific type of loan, ensure the broker's lender panel includes lenders that cater to these requirements. Don't hesitate to ask the broker about their panel, their lender selection process, and whether they can offer exclusive deals. By understanding their lender panel, you can make a more informed decision when choosing a mortgage broker in Australia.
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Their licensing
To become a licensed mortgage broker in Australia, you must meet specific compliance and licensing requirements. This includes completing the necessary education, such as the FNS40821 Certificate IV in Finance and Mortgage Broking, which is recognised by the Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australasia (FBAA). This qualification can be obtained through Kaplan Professional, a preferred qualification provider for the MFAA.
In addition to obtaining the necessary qualifications, aspiring mortgage brokers in Australia should also be aware of the various industry associations they can join, such as the MFAA and the FBAA. These associations offer benefits such as access to exclusive resources, advocacy, and industry support, as well as providing valuable insights and data-driven analysis on key trends, challenges, and opportunities in the mortgage broking industry.
The MFAA, for example, has a network of over 15,500 members and provides support for the growth and success of mortgage brokers while positioning their brand at the heart of the industry. By joining the MFAA, individuals can play a key role in driving professional development, innovation, and industry-wide impact.
Another important aspect of becoming a licensed mortgage broker in Australia is understanding the different membership categories and requirements. For instance, the MFAA requires individuals to complete their education, select an aggregator, and obtain the necessary documentation before applying for membership.
Overall, obtaining a license to become a mortgage broker in Australia involves meeting compliance and licensing requirements, obtaining the necessary qualifications, and joining relevant industry associations to stay informed and connected within the industry.
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Whether they are MFAA-accredited
The Mortgage and Finance Association of Australia (MFAA) is the peak association for the mortgage and finance broking industry in Australia, representing over 15,500 members throughout the country. MFAA-accredited brokers adhere to the highest level of education standards and professional excellence, so you can be confident in the expert guidance and support you will receive.
MFAA members are dedicated to helping you find the right loan options to achieve your goals, whether you're looking to buy a home, refinance an existing loan, invest in property, purchase a vehicle, or secure financing to support your business growth. They offer expert recommendations tailored to your needs, allowing you to make informed decisions and find competitive financial products without the hassle of spending hours researching and comparing financial options.
MFAA research provides valuable insights into the mortgage and finance broking industry, supporting brokers, policymakers, and consumers with data-driven analysis on key trends, challenges, and opportunities. Their exclusive resources, advocacy, and industry support help brokers stand out, grow their businesses, and thrive in a competitive market.
To become and remain an MFAA member, mortgage and finance brokers must meet specific compliance, education, and professional standards. These include residing in Australia with Australian or New Zealand citizenship, permanent residency, or an approved Australian work visa, and holding an Australian Credit Licence (ACL) or being a Credit Representative under the National Consumer Credit Protection Act 2009. The minimum qualification required is a Diploma of Finance and Mortgage Broking Management.
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Frequently asked questions
You can find a mortgage broker by searching online directories, such as the Mortgage and Finance Association of Australia (MFAA), which has over 15,500 members. You can also try searching on Google or by using comparison websites, such as Finder.
It is important to ask your mortgage broker about their qualifications and experience. You should also ask them about the lenders they work with and how they are paid. For example, you could ask: "Do you offer loans from a range of different lenders?", What sort of lenders do you work with?", How do you get paid for the advice you're giving me?" and Why did you recommend this loan to me?".
Mortgage brokers can save you time by researching and comparing financial options for you. They can also provide expert recommendations tailored to your needs, helping you to make informed decisions. Mortgage brokers in Australia are licensed professionals who can offer their services for free, as they are usually paid in commissions from lenders.
