Don't assume a bank won't lend to you - always ask first.

It may be cheaper to arrange the loan yourself.

Download a copy of the fact sheet: 'Managing credit - Finance brokers'

Download the ASIC Brochure: "Don't Kiss Your Money Goodbye"

Finance Brokers

Finance Brokers are go-betweens who arrange loans for people for a fee. Some people use a finance broker because they don't understand the system or are unsure whether they can get a loan.

Theoretically, finance brokers should be able to obtain a product suitable for their client due to their knowledge and access. Unfortunately, some finance brokers will use the fact that they share your culture, religion or language to gain your confidence and take advantage of you.

It may be cheaper to arrange a loan yourself.

If a finance broker contacts you to organise an appointment to find out how they can save you money on your mortgage, BE CAREFUL! If you enter a contract after a broker has come to your front door, you are protected by the door-to-door provision of the Fair Trading Act. View the Act in your state below:

Australian Capital Territory South Australia
Northern Territory Tasmania
New South Wales Victoria
Queensland Western Australia

This law requires door-to-door sales people to give you a detailed contract and allow a 10-day 'cooling off' period. During that time, no money should change hands, and no goods or services should be delivered. You should be given two forms - one explaining the cooling-off period and one that you can use to cancel the contract.

If you do use a finance broker:

You should not have to pay up front and the fee should not be unreasonably high - about 1.5% of the amount borrowed or less
You should have a written agreement with the broker setting out what he or she will do for you and how much it will cost
Check the broker is not just recommending the lender who pays them the highest commission
Do not leave any parts of any contract or agreement uncompleted for the broker to fill in. Complete the documents yourself so you are sure the information given to the lender is right
Do not agree to 'doctor' any figures. If you get finance when the information given to the lender was deliberately misleading, you are guilty of credit fraud and could face a criminal charge
Finance brokers have no magic powers. They cannot get you a better loan than you can arrange for yourself. It is your repayment capacity that a creditor must assess, not how the broker presents the loan
 
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