The role that is done by a mortgage broker is very similar to the role a mortgage salesperson does at a bank or other financial institution. The main difference is that in a bank the mortgage manager can only sell the products from one provider (their own bank).
Whereas a mortgage broker is able to arrange mortgages with a range of banks or mortgage providers and should know the different options available to you by going to different banks. They operate as the middleman between you, the borrower, and the bank or mortgage provider.
Traditionally Kiwi mortgages were dominated by banks, with lenders typically going to their own branch looking to borrow. But the use of mortgage brokers has been increasing over the last couple of decades with mortgage brokers now estimated to be involved in more than 40% of Kiwi mortgages. While their use is still not as prevalent in this country as it is in Australia and in the UK, where they are very often utilised, it is continuing to increase.
In most cases, mortgage brokers don’t charge customers, but instead earn a commission from lenders after successfully placing a loan.
There has been some concern about the possibility mortgage brokers are more likely to direct clients towards the banks that will pay them a larger commission.
Brokers maintain this is not the case and that a reputable broker can hugely assist clients such as first home buyers, shopping around on their behalf and directing them towards the lender most likely to be favourable to their application. This can be particularly helpful if borrowers’ situation is not standard.
In addition, mortgage brokers are happy to handle the “transactional” element of finding the lowest rate and show their worth by guiding customers through the more complex aspects of a home loan process.