Is a mortgage broker really on your side?

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You’ve probably heard there’s usually no charge to use a mortgage broker (mortgage adviser). That’s because they’re paid a commission by the lender you end up deciding to go with. So, if the lender’s paying them and you’re getting their services for free, are they going to put your interests first?

The short answer is a mortgage broker should be working for you. As licensed financial advisers, brokers are required to help clients choose the best mortgage structure for their situation and find the best lender they can to provide it. It’s not about helping the highest paying lender find the best clients.

If you’re looking for a mortgage broker with a great reputation, we have a free service that helps you connect with a specialist from our panel of expert mortgage brokers.

Is a mortgage broker the same as an adviser?

In most cases these are simply two names for the same thing. They both refer to different aspects of the same service. The word ‘broker’ describes the role of representing you to various lenders and negotiating the best deal. ‘Adviser’ is more about the part where they help you choose the best mortgage arrangement for your situation and goals.

Broker was the original name and is still widely used by Kiwis. But some mortgage brokers prefer the term ‘adviser’. They call themselves advisers to emphasise the knowledge and customised advice they provide, which helps you to pursue your goals and save money for years to come. Whether you call them brokers or advisers, the best people will provide an ongoing service through changing interest rates, fixed rate rollovers, loan restructures, moving up to a better property and buying additional properties. Articles from mortgages.co.nz often start by using both terms, so everyone realises they’re the same thing. It also helps people who search online using either ‘broker’ or ‘adviser’.

Can anyone call themselves a mortgage broker?

To legally operate as a mortgage broker or adviser you have to be registered as a financial adviser under a financial advice provider license. That means you have to follow rules set by the Financial Markets Authority and stick to a code of conduct based on the Financial Markets Conduct Act 2013. This not only regulates how you must act as an adviser, but also sets required standards of competence, knowledge and skill. Advisers also need to pass police checks and be accredited by individual lenders to access their broker support systems and receive commissions from them.

Is a mortgage broker really free to use?

In most cases, a broker’s service is free. However, you might get charged a fee if a broker does a lot of work for you, such as arranging a mortgage pre-approval, but you don’t proceed and they miss out on any payment from a lender. A good broker will disclose any possible charges to you, before you decide to work with them. If they don’t, be sure to ask.

What do the best mortgage brokers do?

The best mortgage broker for you will probably:

  • Be accredited with the major banks and non-bank lenders, so they can draw on the widest range of available products, mortgage approval criteria, interest rate specials and cash contributions for things like lawyer fees or property valuations
  • Be someone you feel comfortable working alongside and sharing your financial details, future goals and fears with
  • Disclose any fees they might charge and what can happen to your information (this should happen before you agree to work with them)
  • Reveal the commissions they get from each lender if you ask, or at least which lenders offer them more than others
  • Explain the usual process – who does what, how long things take, whether they’re available after hours and how they’ll keep you up-to-date on progress
  • Present options, rather than tell you what to do
  • Take the time to explain things in terms you understand, including why they’re recommending particular options and not others
  • Be efficient, well-prepared, a good listener, patient not pushy, realistic about likely outcomes and a coach who’s genuinely motivated to help you find the best mortgage arrangement for your circumstances
  • Have received outstanding feedback from previous clients and top independent awards for the volume of mortgages they’ve organised and the level of service they provide
How to find the best mortgage broker for you

Most people start with recommendations from family or friends, or by researching online. 

Alternatively we have a free service that connects you with a top mortgage broker from our panel of award-winning advisers. It’s simple – it only takes seconds, just answer a few quick questions and we’ll do the rest. The best part is that our advisers are paid by the lenders, so their expertise and guidance are provided free of charge to you.

To learn more

DISCLAIMER: The information contained in this article is general in nature. While facts have been checked, the article does not constitute a financial advice service. The article is only intended to provide education about the New Zealand mortgages and home loans sector. Nothing in this article constitutes a recommendation that any strategy, loan type or mortgage-related service is suitable for any specific person. We cannot assess anything about your personal circumstances, your finances, or your goals and objectives, all of which are unique to you. Before making financial decisions, we highly recommend you seek professional advice from someone who is authorised to provide financial advice.

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