Making mortgage shopping easier

CONSUMERS seeking a new home loan or looking to refinance want the mortgage industry to be more transparent so that finding a competitive deal is much easier.

Mortgage brokers account for about 55 per cent of all home loan business and they continue to grow in popularity, often helping guide borrowers through the ins and outs of various deals before they sign the dotted line.

But new Galaxy research compiled for realestate.com.au found 87 per cent of Australians wish there was more transparency around shopping for a mortgage, which often leaves people bamboozled when choosing a suitable loan.

Realestate.com.au’s head of home loans Andrew Russell said it’s not uncommon for borrowers to contact their existing bank for a mortgage instead of shopping around, which may result in them paying more.

“Borrowers will often walk into a bank (initially) but what generally happens after that is they go to a mortgage broker or a provider who offers a range of home loans,’’ he said.

Brokers can sell loans a range of ways – including through branches, mobile lenders and over the telephone.

There are more than 5000 broker businesses operating nationwide.

Scrutiny has surrounded brokers on their commissions made from loan sales, which often includes up-front and trailing commissions over the life of the loan. They must also disclose any commissions they receive from the lenders or any other source to the client.

Consumer finance expert Lisa Montgomery warns customers that before they even talk to someone about a loan, they need to fully equip themselves with information.

“The best research is the research you do yourself, also friends and family will give you advice if they know you are getting a loan,’’ she said.

“Gather as much information as possible and then make a decision to go to a broker and they can offer you a number of products, not just one that a bank can offer.”