This fact sheet explores some of the lesser-asked questions about the mortgage broking industry.
Here’s what this fact sheet answers:
Some of your biggest questions about mortgage brokers
- Q: Are mortgage brokers regulated in Australia?
- Q: What’s the difference between using a mortgage broker and going directly to a bank?
- Q: Do mortgage brokers have access to all lenders and loan products?
- Q: How does a broker select the best loan for me?
- Q: Will using a mortgage broker affect my credit score?
- Q: What’s the difference between a mortgage broker and a loan officer?
- Q: How do mortgage brokers get paid?
Some of your biggest questions about Trilogy Funding
- Q: How is Trilogy Funding different from other brokers?
- Q: What are some of the unique strategies that Trilogy Funding uses?
- Q: Who’s on the team at Trilogy Funding?
- Q: How do I get started with Trilogy Funding?
Some of your biggest questions about mortgage brokers
Yes, mortgage brokers are regulated in Australia. The industry is overseen by several regulatory bodies and is subject to a range of legislative measures designed to protect consumers and ensure the integrity of the financial services sector.
Here are some key aspects of the regulatory framework in Australia:
- Australian Securities and Investments Commission (ASIC): ASIC is the main regulatory body responsible for overseeing the conduct of mortgage brokers. ASIC ensures that brokers operate with integrity, professionalism, and in the best interests of consumers.
- National Consumer Credit Protection Act 2009 (NCCP Act): This act is central to the regulation of all credit activities in Australia, including mortgage broking. It requires brokers to hold an Australian Credit Licence (ACL) or be a representative of someone who holds one.
- Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA): While not governmental bodies, these are two primary industry associations for mortgage brokers in Australia. Membership in these associations often requires brokers to adhere to professional standards, undergo regular training, and follow a strict code of conduct.
- Best interests duty: As part of reforms in recent years, mortgage brokers are required to act in the best interests of their clients. This duty means that brokers need to place the interests of the borrower above their own, ensuring that the recommended loan products are suitable for the borrower’s circumstances.
- Commission structures: After several reviews and inquiries into the mortgage broking industry, there have been discussions and recommendations about changing the way brokers are remunerated to avoid potential conflicts of interest. ASIC and other stakeholders have been involved in these discussions to ensure that the compensation model for brokers is transparent and aligns with the best interests of consumers.
In summary, Australian mortgage brokers are subject to a regulatory framework that aims to protect consumers and maintain the integrity of the financial industry.
Using a mortgage broker and going directly to a bank each has its own advantages and disadvantages. Here’s a comparison of the two approaches:
Using a Mortgage Broker:
- Variety of options: Brokers have access to a range of loan products from various lenders, not just one. This can give borrowers a broader perspective on what’s available in the market, and how you can benefit from each option.
- Tailored recommendations: Brokers can provide advice based on the borrower’s specific circumstances and needs, potentially finding deals better suited to the individual. One bank may have limited loan products.
- Time savings: Instead of visiting multiple banks and filling out numerous applications, a broker can streamline the process, dealing with the paperwork and negotiations on the borrower’s behalf.
- Potentially better deals: With their industry knowledge and connections, brokers might secure better terms, rates, or deals that might not be openly advertised.
- Expertise and guidance: Brokers can explain the complexities of various loan products, helping borrowers understand terms, fees, and potential pitfalls.
- Cost: Most brokers do not charge fees to the borrowers, as they earn commissions from lenders. However, it’s crucial to understand how brokers compensated to ensure there are no conflicts of interest.
Going Directly to a Bank:
- Familiarity: If you have an existing relationship with a bank, you might feel more comfortable dealing directly with them. There could also be benefits or discounts for existing customers.
- No middleman: Some people prefer a direct relationship with their lender, without an intermediary.
- Potentially lower costs: While not always the case, some argue that without broker commissions, banks might offer slightly better rates or terms. This, however, varies and doesn’t occur consistently.
- Limited options: Banks can usually only offer their own products. This might not be the best fit for every borrower.
- Time-consuming: If you want to compare offers from multiple banks, it can be time-consuming to approach each one individually.
In conclusion, the choice between using a mortgage broker and going directly to a bank depends on your individual preferences, needs, and circumstances.
However, if you’re not sure, request your obligation-free 30-Minute Finance Strategy Session with a Trilogy Funding broker and see for yourself.
No, mortgage brokers do not have access to all lenders and loan products. Here’s a breakdown of the reasons why:
- Panel of lenders: Mortgage brokers typically have a panel of lenders they work with, which includes a selection of banks, credit unions, and other financial institutions. This panel is determined based on various factors, including the broker’s own affiliations, accreditations, and business decisions. While this panel can be extensive, it is unable to include every possible lender in the market.
- Specialist lenders: Some lenders, especially those offering niche or specialist loan products, may not be accessible through all brokers. They might operate independently or only work with a select group of brokers.
- Direct-only products: Certain loan products might be offered by lenders exclusively to customers who approach them directly. These “direct-only” products are not available through brokers. Conversely, some lenders may only offer lending products via brokers, such as our unique lending solutions for medical, accounting, or legal professionals.
- Broker affiliations: Some brokers might be affiliated with specific lending institutions or groups, which could influence the range of products they offer or recommend.
- Broker’s due diligence: Brokers typically conduct due diligence on the lenders they work with to ensure they are reputable and offer competitive and fair products. This might mean they intentionally exclude certain lenders from their panel.
- Access to unique offers: On the flip side, brokers might have access to special or unique offers, rates, or terms that are not readily available to the general public due to their relationships with lenders.
It is in your broker’s interest to provide you with a competitive solution. So, they are likely to have access to a wide range of lending products.
when it comes to helping our clients find the best loan, we follow a tried-and-tested process to ensure our recommendations align with your unique needs and circumstances.
Here’s our process:
- Free 30-Minute Finance Strategy Session: We begin with an in-depth Finance Strategy Session to thoroughly understand your financial situation, property goals, and personal preferences. During this Session, we discuss your income, expenses, credit history, long-term financial objectives, and any specific requirements you have for the loan. We also “zoom out” and discuss your broader property ownership goals, as this will impact our recommendations.
- Assessment of borrowing capacity: We evaluate how much you can comfortably borrow without putting undue strain on your finances. This includes analysing your income, ongoing expenses, existing debts, and other financial commitments.
- Research and comparison: Armed with an understanding of your needs and borrowing capacity, we search our extensive panel of lenders to pinpoint loan products that fit your requirements. This involves comparing interest rates, loan features, fees, and other lending product specifics. During this phase, we also call upon our unique relationships with credit officials at some lenders.
- Loan features and flexibility: Beyond interest rate, we consider various loan features such as offset accounts, redraw facilities, loan portability, repayment flexibility, and any other characteristics relevant to your situation. We want to make sure that you aren’t restricted in the future.
- Recommendation: We present you with a selection of loan options that we believe best match your situation, explaining the advantages and disadvantages of each. We provide a solid rationale for our recommendations, ensuring you’re equipped with the information needed to make a confident decision.
- Application support: Once you’ve settled on a loan, we guide you through the application process, ensuring all documentation is accurately completed and submitted to maximise the chances of a successful approval.
- Ongoing support: Our relationship doesn’t end once the loan is secured. We offer continuous support, periodically reviewing your loan to ensure it remains aligned with your needs, especially if market conditions or your personal circumstances evolve.
At Trilogy Funding, our aim is not just to find you a loan, but the right loan that aligns with your goals and property ownership aspirations. We’re here to guide, support, and ensure you feel confident in every decision made during your property investment journey.
Q: Will using a mortgage broker affect my credit score?
Using a mortgage broker in itself does not directly affect your credit score. However, there are certain aspects of the mortgage application process that can have an impact. Here’s how it works when you engage with a broker like Trilogy Funding:
- Initial consultation: During your initial Finance Strategy Session, we gather information about your financial situation, needs, and objectives. This phase does not involve any credit checks and, therefore, does not affect your credit score.
- Soft inquiry: In some cases, with your permission, we might conduct a ‘soft inquiry’ or ‘soft pull’ to get an overview of your credit situation. Soft inquiries do not impact your credit score.
- Formal loan application: Once you decide to proceed with a particular loan application, a ‘hard inquiry’ or ‘hard pull’ is typically initiated by the lender to assess your creditworthiness in detail. Hard inquiries may temporarily reduce your credit score, but usually this is only by a few points.
- Multiple applications: One of the benefits of using a mortgage broker is the ability to compare various loan products without initiating multiple hard inquiries. We aim to find the best product for you and then proceed with a formal application. However, if you decide to apply to several lenders simultaneously, multiple hard inquiries could have a more pronounced impact on your score. It’s crucial to strategise applications to minimise the potential negative impact.
- Final consideration: It’s worth noting that while hard inquiries can initially lower your credit score, their impact diminishes over time. After 12 months, they no longer affect the score, and they drop off your report entirely after 24 months.
In conclusion, while engaging with Trilogy Funding or any mortgage broker doesn’t directly affect your credit score, the associated activities and formal loan applications can have implications.
Both mortgage brokers and loan officers play integral roles in the home loan process, but they have different functions and responsibilities. Here’s a breakdown of the differences between the two, based on their roles, responsibilities, and the entities they represent:
- Mortgage broker: A mortgage broker typically works independently or within a brokerage firm and acts as an intermediary between borrowers and potential lenders. They do not represent any specific bank or financial institution.
- Loan officer: A loan officer, sometimes referred to as a mortgage banker, is employed by a specific bank, credit union, or lender. They represent their employer’s interests and loan products.
- Mortgage broker: Brokers liaise with various lenders to find the best loan product that fits a client’s needs. They have access to a range of loan products from different lenders, offering clients a variety of options.
- Loan officer: Loan officers offer and manage loan products specifically from the institution they work for. They can usually only recommend and process loans that their institution provides.
- Mortgage broker: Brokers usually earn a commission or fee for facilitating the loan, which can be paid by the borrower, the lender, or a combination of both.
- Loan officer: Loan officers receive a salary from their employer, the lending institution, and may also earn bonuses or commissions based on the volume or type of loans they originate.
- Mortgage broker: Once a suitable loan is identified, brokers help clients with the application process, liaising between the client and the lender until the loan closes.
- Loan officer: Loan officers help clients through the application process for their institution’s products, manage the loan’s underwriting, and oversee the loan until closing.
Licensing & Regulation:
- Mortgage broker: In places like Australia, mortgage brokers are typically required to be licensed and adhere to regulatory guidelines, ensuring they act in the best interests of their clients.
- Loan officer: Loan officers might also need specific certifications or licenses, depending on the jurisdiction, but these often differ from the requirements for brokers.
- Mortgage broker: As they do not represent a particular lender, brokers generally act in the best interests of their clients, advocating for them to secure the most suitable loan.
- Loan officer: While loan officers aim to help borrowers, their primary responsibility is to their employer, the lending institution.
In summary, the main difference lies in representation. A mortgage broker acts as an intermediary, offering loan products from a variety of lenders, while a loan officer represents and offers products from a specific lending institution.
Mortgage brokers are usually paid through a combination of upfront and trailing commissions from the lenders they choose. Here’s a breakdown:
- Upfront commissions: This is a one-time payment made by the lender to the broker once a mortgage loan is settled. It is typically a percentage of the loan amount. The exact percentage can vary based on the lender, the size and type of the loan, and any agreements or arrangements between the lender and broker.
- Trailing commissions: These are ongoing commissions that a broker receives for the life of a loan, provided the loan remains outstanding. It’s a smaller percentage compared to the upfront commission and is paid monthly, quarterly, or annually. It’s essentially a reward for the broker bringing a long-term customer to the lender.
- Fees charged to the borrower: While less common, some mortgage brokers might charge a fee directly to the borrower, especially if the borrower has a complex financial situation or requires specialised services. However, most brokers prefer to work solely on commissions from lenders to remain competitive and attractive to potential borrowers.
It’s worth noting that the remuneration structure and the potential for any conflicts of interest should be transparent. Regulations in Australia require mortgage brokers to disclose how they are compensated and any potential conflicts they might have when recommending specific loan products.
Some of your biggest questions about Trilogy Funding
Here are the distinctive features and offerings that make Trilogy Funding stand out:
Experience and recognition: Over the past 12 years, we’ve helped more than 3500 people start, fix or grow exciting property portfolios. We’ve settled billions of dollars’ worth of loans across Australia.
National presence: While our national office is based in Canberra, we serve clients across Australia, including major cities. This broad reach means we understand regional property markets as well as major capital cities.
Unique access and strategies: We have unique access to senior credit officials at banks and lenders, which helps us secure loan approvals more effectively. We also use distinct finance strategies to help:
- Homeowners transition into property investment and grow exciting property portfolios,
- Investors “fix” underperforming properties,
- Borrowers break through bank-imposed lending restrictions (so you can borrow more, even when your bank has said “no”),
- All lenders lower interest rates or better conditions when refinancing
- Business owners unlock finance for growth or investment
See more of our unique strategies below.
Special benefits for Medical, Accounting, And Legal Professionals: We connect medical, accounting, and legal professionals with exciting unadvertised lending products. By doing this, we can connect borrowers with advantageous loan features, rapid application processes, and highly competitive rates.
Expertise in loan structuring: We ensure loans are structured to provide our clients with maximum flexibility and control over assets. We actively avoid potential hazards like “cross-collateralisation” and “equity lock up”, which many other brokers might overlook.
Efficiency and ease: We save our clients time and effort, handling most of the legwork in the loan application process and ensuring the smoothest possible experience for all.
Market insights: We understand where other investors are buying. This allows us to offer valuable market intelligence to our clients looking to expand their portfolios.
Educational resources: Beyond just brokering loans, we provide educational property investor resources.
Engaging content: Our podcast, “Your Lending Era”, delves into the intricacies of finance in Australia. This demonstrates our dedication to keeping both ourselves and our clients informed about the evolving landscape of lending.
Here are some of the unique strategies we employ to help our clients:
- Helping all borrowers refinance to get a better rate or conditions: We help individuals refinance their loans, potentially obtaining better interest rates or loan terms, leading to long-term savings. We often use our relationships with senior lending officials to get exciting conditions for our clients.
- Helping homeowners become investors: We have strategies that help homeowners transition from owning one property (their home) into multiple-property ownership.
- Improving underperforming investment properties: We can provide a third-party perspective on an underperforming investment property, and provide an action plan to help you either fix it, or change it for another one.
- Avoiding common hazards: We’re proactive in directing clients away from potential loan pitfalls, such as “cross-collateralisation” and “equity lock up” risks.
- Loan structuring for stability and flexibility: To safeguard our clients from potential complications in the future, we recommend certain loan structuring practices. For instance, we might advise making loans standalone with standalone securities, adding an extra layer of stability and flexibility to a property portfolio. Please note, this is general advice and may not be the best for you. Please speak with us if you’d like to discuss loan structuring.
- Helping our clients borrow more: A challenge many property owners and investors face is encountering lending restrictions set by their banks. We provide guidance and smart lending strategies to help our clients break through these limitations, allowing them to continue expanding their portfolios.
- Growth and diversification strategies: Beyond simply arranging finance, we ensure that loans are structured in a way that diminishes potential risks and gives our clients more choices. Our goal is to help them grow their portfolios more rapidly.
- Providing exciting loan conditions to certain industries: We connect medical, accounting, and legal professionals, and High Net Worth/private banking borrowers and SMEs with exciting unadvertised lending products.
- Helping our clients buy their first home: For those taking their first steps in the property market, we have strategies to navigate the process, ensuring you lock in an appropriate home loan that’ll set you up for future success.
- Business startup loans: We offer strategies to help our clients secure the necessary loans and finance to launch or grow a business.
Click below to meet our team.
- David Thomas – Managing Director
- Sophie Ritche – Head of Client Services
- Paul Wojtaszak – Partner
- Nicole Brophy – Finance Strategist
- Hope Batchelor – Finance Strategist
- Carrie Yang – Client Services Coordinator
- Jessica Graves – Client Services Coordinator
If you’re looking for an expert team to help with your property finance request a Free 30-Minute Finance Strategy Session during which you will…
- Get a better understanding of the lending options available to you
- Discover no-cost ways to save money on interest, fees, and charges
- Get an up-to-date picture of the lending landscape including rates, conditions, and how to structure loans
- Learn about our process to find you a better loan that could save you thousands.
This no-obligation free session will be held with one of our experienced mortgage brokers.
Please be assured this will not be a thinly disguised sales presentation. On the contrary, you’ll receive our best strategic advice, specific to your situation, so you too can accumulate multiple properties without sacrificing your current lifestyle and accelerate your progress towards wealth.
Please note, the numbers and assumptions listed in this article are for educational purposes only. Individuals should seek specific advice pertaining to their unique situation and the real estate market before making any decisions.
Trilogy Funding Two is a corporate credit representative (Representative Number 506131) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit Licence 391237)