May 3, 2018
When shopping for the right home loan, going through a mortgage broker instead of doing all the comparing and investigating yourself can streamline the process, making it easier for you to get a suitable loan. Ultimately, you need to find a mortgage product that will tick all the boxes. Not just in terms of getting a good rate but also in finding the perfect mortgage with the features, fees, and terms that will work for your circumstances.
Let’s face it. Finding a mortgage can get complicated. When weighing up your options, what you want to do is look beyond surface details like interest rates and rebates. What will your overall experience be?
With a bank, you’ll likely face a general set of choices but won’t have the advantage of seeing the whole picture. With a mortgage broker, you’ll leave your comfort zone of the bank you may have been doing most of your finances with for years. But, this branching out can be a good thing, because you’ll be introduced to more possibilities.
Also, even though you may have a bit of brand loyalty for your bank, that doesn’t mean a bank lender is going to offer you a better deal or cut you a lower rate. You’ll likely get the same offers as any other customer.
When deciding between a mortgage broker or bank, if you make the wrong choice, your options may be limited, or on the other hand, too overwhelming. You also may not get the guidance and hands-on help that you want if you go in the wrong direction. Take a look at what you can expect from both choices to help you make an informed decision when purchasing a home loan.
The bank will be able to offer you a small number of loan products, depending on the size of the bank. This will enable them to customise your loan some and give you some options. Depending on what you are looking for, the options a bank offers may be enough.
Limited options and limited information
When looking for choices, a mortgage broker is always going to win out against the bank. This is because the bank is only going to offer you the loan products that they offer. When you talk to a lender, they are only going to talk about the features and differences of the rates and products they offer. Unless you already have done your research, you may not realise what features or details of your mortgage contract you may be missing out on.
They also will only be able to give you interest rates that are typical of that bank. Some banks charge higher interest rates than their competitors as standard, so it will pay to investigate before getting a loan from them.
In some instances, banks partner with other banks to provide mortgages. This may be because the one bank only wants to loan money to highly qualified individuals, but the rest can get a loan from the other bank, although the bank will make the arrangements.
Packaging may yield better results
Possibly the biggest advantage in using your bank to get a home loan is that they may be able to offer you a good interest rate. They might do this if you already have some accounts with them. You also may be able to package your mortgage with the financial accounts you already have with your bank, like a credit card, checking and savings account.
Today, most homeowners are savvier about their home loans. They know there is more to getting the right mortgage than just comparing interest rates. That’s where a mortgage broker comes in.
If you want to dig deeper into your options beyond settling with the standard option your bank has, a mortgage broker takes the cake for flexibility and suitability. It’s not surprising that brokers write well over half of all home loans in Australia today.
When comparing mortgage broker vs bank lender, here’s what you can expect if you go through a broker to get your home loan:
A wider range of choices
The main advantage is that a broker is able to provide you with a number of home loan options from many banks and other lenders. This is because they work with many organisations, sometimes as many as 25, or more. Each one of those banks may have four to seven different products, giving you a huge range of choices.
They do the work
Here’s the best part. A mortgage broker is going to do the majority of the work for you. You just have to consider your circumstances and make the right decision for you.
A broker is your source of contact with the lenders. This means that they take care of the cumbersome communications. You simply supply them with the required information and necessary documents and they make the contacts and find a loan that will best fit your individual needs.
A greater likelihood of getting a loan
If you have special considerations that may limit your ability to get a home loan, your best option may be to go to a mortgage broker. Because they work with a number of lenders, brokers are likely already aware of one or two lending associations that provide loans in special situations, such as to those with bad credit.
Loan fees can vary
A highly experienced mortgage broker may be able to get you a much better deal than a bank. Part of the reason for this is that they often deal with wholesale mortgage rates, rather than retail rates, which a bank lender deals with regularly.
Keep in mind, however, a new broker may not fully understand the mortgage process yet. As a result, you may end up with slightly higher fees than you expected. It’s worth it to make sure you work with a broker that has had a few years of experience. It also helps to pay attention to how they navigate the process. For example, when they recommend a loan product or a lender, ask why and ensure their recommendations are perfectly aligned with your expectations.
Whether you decide to go with a bank or a mortgage broker, it will pay to look around first by searching and comparing rates from various home loan lenders. The more homework you do on your own, the better equipped you will be to ask the right questions and to get all the information you need to find the right loan for you.
Written by Refinancing.com.au
Refinancing.com.au is an end-to-end service that helps people refinance their home loan. We empower you to search for your home loan, and choose the process that suits you.
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