Choosing a Mortgage Broker Vs Bank

Should you talk to an agent or directly to the lender?

This is probably the first thing that may pop into your head when you decide to find the perfect mortgage. We’ve looked at the current market conditions in Australia, and according to research, more than 70 percent of Australians opt for brokers to receive the loans they need. That means currently, brokers make more than two out of three loans, and the amount of people who prefer brokers instead of directly contacting an individual lender for a mortgage is increasing each year.

Why are brokers preferential to brokers?

Let’s take an insight into the reasons behind the increasing popularity of brokers in recent decades. Making a loan arrangement is a major undertaking that is a complex process that requires many paperwork. The easy reason is the personal experience that brokers provide during the process, which can be overwhelming and confusing, to put it lightly. According to research and experience of brokers in the business, most have an average experience that is more than ten years. They also cater to more than 50 lenders and more than 100 products.

How can a broker assist you?

A broker plays an essential role throughout the process, from needs analysis through submission and, finally, settlement. The process is contingent on your financial requirements and the bank’s requirements. Take a look at how a broker could assist:

• A mortgage broker gathers all information with the aim of gaining a better understanding of your needs and then analyzes the data to determine the most appropriate banks and products in accordance with the requirements of the client.
• After having analyzed the data, they’ll provide information on different loan providers and rates for you to select from. You can choose which one you would like to use for your loan, and the mortgage broker will assist you in the process of obtaining a loan.
• The job of a mortgage broker is to do the entire process for you from beginning to finish. They also act as a middleman between banks according to their needs.
  Mortgage brokers typically operate on their own, and they do not charge charges in exchange for services. Their main focus is making loans settle at the highest rates they can get from different lenders.

In our last article, we looked at the role played by an agent in securing loans; now, let’s examine the advantages and drawbacks of using an expert mortgage broker to assist you in the process of lending or directly approaching a lender at the bank to get your loan.

The advantages of an agent:

• A mortgage broker can be described as a one-stop shop. They have access to more than 50 lenders, including banks as well as non-bank small lenders, that are not accessible online. They can also find the most competitive rates for you.
• A mortgage broker is aware of your requirements and will design the loan to suit your needs.
• Mortgage brokers are local, meaning they are aware of the local market and are much easier to reach.
• Mortgage brokers have experience with different products and lenders and are current on the most recent regulations. A mortgage broker can complete all the paperwork on your behalf after obtaining the necessary documents.
• If you’re looking to obtain an advance, it’s recommended to speak with an agent, as they usually are aware of which lenders can approve the loan more quickly.
• You do not have to pay any fees to mortgage brokers. The bank will pay agents for loans they provide to you.
• The job of a broker is to offer ongoing support to you up to the time that the loan expires.

For more details about how to select the best broker for your needs, check out the article How to Choose the right broker for Your Mortgage Problem.

Some disadvantages to choosing the broker you want to use:

• Certain banks don’t employ third-party brokers.
• Smaller brokers might lack access to the full range of lenders or the resources needed for ongoing service offerings.
• Banks don’t offer some products or direct deals to brokers.

Advantages of choosing a banking institution:

• If you’re a current client of a bank, you can usually arrange a loan with other services offered by the bank to make a bundle deal.
• Another advantage of contacting an institution directly is the reduction of the amount of time spent on intermediaries.
• A continuing service proposition is more practical, and it has a relationship with the bank you already have.

The drawbacks of using a bank

• They will inform you of their offerings, and you will not know the most effective deals available on the market.
• The bank will generally not complete the paperwork, so you’ll need to fill out these yourself.
• At banks, it is possible that you may not have a specific contact person for concerns regarding the loan you have taken out and, in general, are working with call centers.
• If you’re trying to obtain a loan, it might not be possible at times because banks could have backlogs and won’t be able to review your application in a priority manner.
• Certain lenders may have limited options for self-employed, complex, or non-confirming agreements.