Mortgage Broker vs. Bank: Which is best for you?

Should I use a mortgage broker or bank? Which is best?

This page is designed to educate our clients and to answer some general questions that you may have.

Firstly, let’s be very clear on one thing, a bank or lender will always be providing the finance to you once we assess your situation. Our job is simply going to narrow down the options that are available to you. We are your consultant, not an actual lender of money.

What this means is that you now have a way of accessing hundreds of products that are offered by dozens of lenders and banks with one simple phone call. We could really write all day about this subject because there are so many aspects to why a mortgage broker must be the first option for any borrower and going directly to a lender is really your last option. Please read on to understand.

Mortgage Broker Vs Bank:

Understanding the basics

Should I use a Mortgage Broker?

Questions and Answers

Q: What can Illawarra Mortgage Brokers do for me that will make applying for a home loan easier and better?

A: We are contactable at any time, unlike the banks and lenders, to assist you with any enquiries. If you need to talk to us after you finish work, it will not be a problem.

We assess your situation and provide product recommendations suited to your needs. Because we can access hundreds of loans in just minutes, you have the ability to select the best option from the recommendations provided to you.

We explain the loans available to you in easy to understand terms, answering any questions that you may have.

We lodge the loan with your chosen lender on your behalf and then track its progress and keep you informed along the way.

Q: Why is using a Mortgage Broker a better option for me than just using a bank?

A: The obvious answer is that your Mortgage Broker has access to hundreds of loans. A single lender or bank is only able to discuss their own loans and products, which makes it hard for them to compete with a Mortgage Broker. They are not authorised to discuss or even compare other lenders products and that is a fact.

They may have a competitive loan, but is it the MOST competitive? If it is, how would they know? Unless they can learn about other lenders products and compare the differences then they can’t know. Only your Mortgage Broker can advise on different lenders. It is what we do.

Q: If I just use Google to look for the best rate, isn’t that all I need? Surely I can just find the cheapest rate on the internet and go with that. Why would this not be a good idea?

A:This is a complex question because there is a lot more to look at than just the interest rate. To keep it simple, here are four answers that will cover the basics:

1. Obviously your circumstances and the viability of all types of loans needs to be assessed properly. In particular – loan structuring that will be suitable to what you are trying to achieve, not only now but in the future.
2. The conditions and policies of some of the lenders. Will they allow certain features, are there extra fees associated with their loan? Are you likely to have your rate increased after a certain amount of time because it was an “introductory rate”? Of course the lenders we deal with also have these concerns, the advantage to you is, that we can be selective and have the ability to choose which lender is charging less fees.
3. Interest rates. It is important to note that just because you see a rate advertised as a low rate, it does not mean it is the lowest out there. An example of this: Some lenders have low rates that may be advertised just above other rates that you are seeing. Now, if you are borrowing above $250,000, the advertised rate could be discounted with some lenders, and let’s say that you are also not borrowing over 80% of the property’s value, there may be a further discount. Now you have a loan that is more than likely a lot cheaper than what you originally may have Googled. It will cost you nothing to find out where you stand so there is really nothing to lose and more than likely you will gain a better loan.
4. All fees are also compared, including, application fees, valuation fees, lenders legal fees, package fees, account keeping fees and monthly fees, as they are a direct cost to you and we could possibly save you some money in this area also.

Mortgage Broker Vs Bank

Should I use a bank?

Questions and Answers.

Q: Isn’t it safer to go directly to a bank because of the private information that I need to discuss with them?

A: We understand that dealing with client’s sensitive personal information is a part of any lending transaction, and is a genuine concern for some people. The rules and regulations surrounding sensitive information are exactly the same for your Mortgage Broker as it is for a lender. There is absolutely no difference. It makes sense when you understand that the loan will always be lodged with a lender and that the rules apply to all involved.

Q: Can I build off my existing relationship with my lender where I have my savings. Surely they will give some extra help to a loyal existing customer who wants a home loan?

A: Of course this is possible, after all, they do sell their own products and would be delighted to assist you, but is it going to get you the most competitive loan? Usually no, because the loan products that they have are just their own products. They have no other choices, which now limits your options. Remember, this only affects the person who has to pay for the loan, which of course, is the customer.

Q: Maybe my loan could be approved faster if I go directly to the lender because they can do it all in one place?

A: Your situation will still need to be assessed and formally approved by the banks credit area, which is usually located at a national location, where all loan applications are assessed for that lender. Some lenders also use offshore processing because it is cheaper for them (India and Philippines usually). The loan can be “approved on the system” of course, but it still needs to be sent for assessment. Your mortgage broker has the same ability, just with a lot more lenders.

Q: If I get a loan from the bank where I have my accounts now, does that mean that I do not have to go through the hassle of setting up new accounts, with a new lender, for loan repayments?

A: You can keep your savings accounts that you have now. Once you are approved for a home loan, you can direct debit your existing account. There are a few more payment options available also, such as Post Office payment, internet banking transfers or pay directly from your salary.

If you're still wondering what to do please contact us and we will help guide you, no cost associated at all. Call us on 02 4257 5626.