I am an Australian citizen based in the UK and have been looking to purchase a property in Australia in anticipation of my returning home over the next few years. I had initially thought I would apply to my own bank but after speaking with an expatriate friend who recommended I seek the services of a mortgage broker, I did exactly that.

I asked my buddy what one should look out for when retaining the services of a mortgage broker? His advice was to deal with a mortgage broker who is a member of the MFAA. It seems that at this stage in Australia there is no national regulation of mortgage brokers. Western Australia introduced legislation to regulate the activities of mortgage brokers in that State in 2007. The mortgage broker and non-bank lender industry have been lobbying for uniform legislation to avoid the costs and difficulties of meeting different requirements in individual states. Until recently this seemed unlikely but now the Australian Federal Government has received the go ahead from all the states and has undertaken to introduce uniform legislation for the mortgage industry as soon as possible.

In the meantime it is important that when dealing with a mortgage broker you check that he or she is a member of the Mortgage Finance Association of Australia (MFAA) because this body does offer training and requires a mortgage broker to meet specific standards of professionalism in his business. It also requires that mortgage broker members pass certain tests in relation to any legal requirements connected with mortgage broking activity e.g. The Anti-Money Laundering Act, Privacy Act, The Uniform Credit Code.

An added benefit of dealing with a mortgage broker who is a MFAA member is that all members (includes mortgage brokers, non-bank lenders etc) are also members of a recognised dispute resolution entity. In the case of the MFAA, most of its 13000 members are members of COSL (Credit Ombudsman Services Limited). This is an ASIC-approved external dispute resolution scheme (similar to the Financial Ombudsman Scheme) and gives consumers access to a free dispute resolution process should anything not be satisfactory about the services or product provided by a member mortgage broker. In the excitement of purchasing a new home, borrowers can often overlook the detail of their home loan ? what are the terms and conditions? Do they give you the flexibility the mortgage broker promised? Is the interest rate the same as initially conveyed to you by the mortgage broker? Do you have an interest only period for up to 5 years so that should circumstances require you can keep your home loan repayments to a minimum and thereby reduce if not avoid the possibility of a default. Some borrowers commit to higher principal and interest payments without really knowing how they will budget Far better to enter an interest only loan and make additional repayments of principal as and when you can afford to ? almost all home loan mortgages that are interest only will also allow you to make additional repayments of principal. You should discuss your cash flow position with your mortgage broker so that the home loan applied for is one that you can adequately service. An MFAA mortgage broker should then be well positioned to seek the most appropriate home loan for you.