Will a Mortgage Broker Have my Best Interests at Heart?
How do I know if a Mortgage Broker Will Have my Best Interests at Heart?
In Australia, mortgage brokers are licensed professionals who act as intermediaries between borrowers and lenders to help them find and secure a suitable home loan. While mortgage brokers are legally required to act in the best interests of their clients, some people may still wonder whether brokers will truly have their best interests at heart. In this article, we'll explore this question in more detail.
Firstly, it's important to understand that mortgage brokers in Australia are legally obligated to act in the best interests of their clients. This duty of care is set out in the National Consumer Credit Protection Act (NCCP) and requires brokers to ensure that any loan they recommend is not unsuitable for the borrower. Brokers must also provide borrowers with a written assessment of why a particular loan is suitable for them.
In addition to legal obligations, mortgage brokers also have financial incentives to act in their clients' best interests. Brokers are typically paid a commission by the lender when a borrower takes out a loan recommended by the broker. However, the commission is not the same for every loan or lender, and brokers must disclose any commissions they receive to their clients. If a broker recommends a loan that is not suitable for the borrower, it could result in a financial loss for both the borrower and the broker.
Furthermore, mortgage brokers can help borrowers navigate the complex and ever-changing home loan market. Brokers have access to a wide range of lenders and loan products, which allows them to find loans that may not be available to borrowers who approach a lender directly. Brokers can also help borrowers understand the various fees and charges associated with home loans, which can be confusing for those who are not familiar with the lending process.
It's also worth noting that mortgage brokers are subject to regulation by the Australian Securities and Investments Commission (ASIC). ASIC sets out the standards and conduct expected of mortgage brokers, and brokers who breach these standards can face disciplinary action, including fines and suspension or cancellation of their license.
While some people may question whether mortgage brokers have their best interests at heart, the reality is that brokers are legally obligated to act in the best interests of their clients. Brokers also have financial incentives to ensure that the loans they recommend are suitable for their clients. Additionally, brokers can provide valuable assistance to borrowers by helping them navigate the complex lending process and find loans that may not be available to borrowers who approach a lender directly. As with any financial decision, it's important to do your own research, seek professional advice, and carefully consider your options before committing to a home loan.
Speak to a mortgage broker today about refinancing to set yourself up to pay off your home faster and avoid paying unnecessary interest.