The 10-step framework

1. STEP 1

   Understand how brokers get paid

   Almost all Australian residential mortgage brokers are paid commission by the lender, not directly by the borrower. Standard commission is upfront (paid on loan settlement) and trailing (paid over the life of the loan). This is disclosed to the borrower under regulation. Broker fees direct-to-client are rare in residential mortgages.

2. STEP 2

   Verify accreditation and licensing

   Every Australian mortgage broker must be licensed under the National Consumer Credit Protection Act and hold Australian Credit Licence (ACL) or work under one. Check the ASIC register at connectonline.asic.gov.au. Best-Interests Duty legislation applies to residential brokers.

3. STEP 3

   Ask about the panel size

   Brokers work with lender panels ranging from a handful of lenders (small brokerage) to 60 or more (large aggregator). Larger panels increase options but not always outcomes. Ask specifically which lenders they have submitted for in the last 6 months and how the panel is chosen.

4. STEP 4

   Confirm construction loan expertise

   Progress-payment construction loans have specific requirements that differ from standard home loans. Ask for evidence: how many construction loans have they placed in the last 12 months? Which lenders on their panel do construction loans well? Some brokers avoid construction lending; not the right broker for a build.

5. STEP 5

   Compare on process and communication, not just rate

   Rate is important but is a market variable that all brokers can typically access. What differentiates brokers is process: response times, quality of pre-approval work, ability to handle valuation issues, coordination with the builder for progress payments. Ask for references on process quality.

6. STEP 6

   Test their responsiveness before engagement

   How quickly did they return your initial inquiry? A broker slow to respond at the sales stage will be slower during the transaction. Broker responsiveness has a direct impact on your ability to lock in rates and manage timing.

7. STEP 7

   Ask about specialist products

   For duplex builds, modular homes, first home buyer schemes, non-resident buyers, self-employed borrowers, and other non-standard scenarios, specialist products exist. A broker who knows the specialist lenders can secure options that mainstream lenders decline.

8. STEP 8

   Get pre-approval before committing to a build

   A broker pre-approval based on your actual financials confirms borrowing capacity. Do not sign a builder contract on assumed capacity; pre-approvals are typically free and quick.

9. STEP 9

   Confirm the broker will handle valuation issues

   Property valuations by lender-nominated valuers can come back low, threatening the loan. A good broker handles the valuation dispute, orders alternative valuations, or moves to another lender. Confirm this scope is included, not extra.

10. STEP 10

    Understand the ongoing relationship

    After settlement, brokers typically review the loan every 12 to 24 months and offer to refinance if better rates or products become available. Confirm the review process, and how you contact them for changes over the life of the loan.

FAQs