A mortgage broker is a trained professional that represents people seeking home mortgages and finds them the mortgage that is right for their situation. A Mortgage broker is knowledgeable about the entire mortgage process are able to use their knowledge to help their clients secure the best mortgage to fit their needs. A mortgage broker is basically financial matchmaker between lender and borrower. Most Mortgage brokers work on a referral basis, so it is very important to them to do an outstanding job and act on the best interest of their clients in order to be referred to other potential clients. Mortgage Brokers therefore need to be good at relating to people and building and retaining relationships with current and past clients.

Mortgage Brokers work with numerous lenders, attempting to match the client with the right lender. Mortgage Brokers have the knowledge to secure the best possible rate for your situation by shopping all of their accepted wholesale lenders. Brokers have forced retail lenders to compete with other loan sources driving down costs nationwide. Brokers do however pass on the actual funding and servicing of loans to wholesale mortgage banks. All Mortgage Brokers are regulated by several federal laws and regulations and dozens of state laws and licensing boards.

A mortgage broker charges a fee for his service, but has access to a wide variety of loan programs. Although the mortgage broker charges a fee for this service, most borrowers will still save money by using a broker, as the broker is performing services which would otherwise be performed by employees of the lender. For example, a mortgage broker may be able to provide you with the same rate that the bank is providing but the mortgage broker may be able to charge zero points whereas the bank may be requiring one point. In fact independent surveys have shown that in many cases the fees charged by a broker are less and the interest rate obtained is lower than if the borrower went directly to the lender. A mortgage broker must comply to standards set by law in order to charge a fee to a borrower. Many states also require the broker to provide you with separate disclosures listing the fees and charges to be collected up front. Your Good Faith Estimate is an estimate of these fees and charges. The amount of any particular fee or charge can vary depending on many factors, such as the lender's or your broker's out-of-pocket costs and internal administrative expenses, competitive factors, industry standards and practices, and third party charges. In some situations, you can run into greedy brokers that try to charge you direct, high fees for their service. Compare fees charged by several lenders and mortgage brokers.

Mortgage brokers are offered mortgage products and services at wholesale prices and market these products and services to consumers. In return for providing the wholesale mortgage lenders with this service, the wholesale mortgage lender will offer the mortgage broker reduced interest rates to offer to its customers. The broker's fee will be the difference between the wholesale and retail price of the mortgage. This means that by using a mortgage broker, most of the time you are going to be able to get a lower rate because the mortgage broker is able to offer wholesale rates versus the banks retail rates.

There are a lot of choices available when it comes to looking for a home loan, which is great for consumers because increased competition means more products, better service and competitive rates. Today about 42% of home loans are provided by brokers and non-bank lenders – gone are the days of putting on your best suit and visiting your bank manager.

Irrespective of the person or organisation you choose to obtain a home loan for you, make sure they are a Member of the Mortgage Industry Association of Australia (MFAA). MFAA members and accredited mortgage consultants are bound by a strict industry code of practice that ensures the highest standards of business practice when representing you.

Banks these days are called the “traditional” lenders. They offer loans directly or through one of their accredited mortgage brokers. To obtain the loan, you are required to fulfill the bank’s lending criteria. If you obtain the loan through a mortgage broker you do not pay any more (unless you are obtaining an extra service), and you don’t pay a commission —the bank pays this to the broker for bringing your business.

Mortgage managers or non-bank lenders, this group operates in a similar way to the banks, offering their mortgage portfolio to you directly or through their accredited mortgage brokers. The funding for the loan comes from a variety of sources, and the owner of the mortgage is the provider of the funds. They manage the mortgage on behalf of the owner/trustee.

Non-conforming lenders
If you don’t conform to banks’ and/or mortgage managers’ lending criteria due to the inability to substantiate your income source due to being self-employed, having an adverse credit history or poor payment record, then this group is for you. Their mortgages can be obtained directly, or through a broker, but their rates and fees are normally higher than conforming loans. If successful in gaining your business, the broker will also receive a commission from a non-conforming lender.

Mortgage brokers provide a variety of mortgage products, which they obtain for you through the panel of lenders they are accredited with. Essentially they are an agent of their panel of lenders, working with you to get you the most appropriate loan for your circumstances. They work closely with you to prepare the documents for the lender, submit the application, liaise with both parties through the process and answer any questions through to the approval stage of the loan. They offer their service free of charge as they are remunerated by a commission from the lender.

MFAA (Mortgage Finance Association of Australia) member mortgage brokers will be transparent when it comes to providing you with full details about the loan, any upfront or ongoing fees, commissions, and who was on their panel of lenders. In NSW the broker is required by law to provide this information.