Finance Broking Agreement

If you decide to consult a finance specialist to help you choose an appropriate loan, many will now ask you to sign a written agreement which provides the details of the service they are going to provide for you. Loan Market have introduced the agreements as standard practice.

What exactly is a Finance Broking Agreement?

A FBA has been designed with best interests of consumers in mind. It ensures that when you give the go ahead to your broker to apply for a loan on your behalf that you have done so fully informed of all loan elements, fees and charges, as well as how the mortgage broker has helped you reach a decision and what commission the lending institution will pay them if your loan is approved.

There are four sections to the document

A summary of the main terms of the loan you are seeking i.e. the loan amount, the term of the loan, loan repayments, interest rate, and any special loan features such as a redraw facility or internet banking.

A list of the panel of lenders. Your finance specialist will be accredited with a variety of lenders. When comparing the loans between different lenders’ products, the comparisons will be between those on this panel. This ensures you know who your broker is ‘shopping’ with on your behalf.

A list of any fees or charges you will have to pay. Most finance specialists will not charge you a fee for their assistance as they are remunerated by the lender if the loan settles. All lender commissions to be paid will be listed in the FBA.

A clause which allows the specialist to provide your information to a third party (i.e. a lender, mortgage insurer or valuer) for the purpose of having your home loan approved.