Should you choose a mortgage broker or bank?
Working out which is the beast loan on offer can be difficult at times. With a choice of dozens of lenders, it is very difficult to be sure you are getting the best deal for you, and your situation.
So what are the differences between using a broker and going to your bank?
What is the Role of a Mortgage Broker?
A Mortgage Broker’s role consists of many tasks, the moment you first make contact with them till the day you sign your mortgage document and “if he is good, well into your future”. Firstly, a mortgage broker is responsible for assessing your situation and your creditworthiness. This will help him or her to develop a better picture of your chances of qualifying for a home loan. This assessment will also typically cover your income levels and ability to repay a mortgage.
Next, a mortgage broker will take your information and work to find a loan that meets your needs as closely as possible. Most brokers have access to vast databases of information on available lenders, allowing them to research your options quickly and effectively. Brokers can also provide guidance throughout the entire process. If you have questions about your mortgage options, contacting a broker can be very effective.
The Advantages of Using a Good Mortgage Broker.
First up the broker will have access to 20-30 lenders on their books, a good understanding of policies will help them find the most suitable loan for a client without the client having to meet with multiple banks and try and become a home loan expert. More importantly, brokers are not aligned to one particular bank and work more as an agent for the client rather than the bank itself. a good broker is well practised in finding the best deals. They will know the nuances of lenders’ credit policies and should be able to direct you to lenders best suited to your circumstances. When it comes to seeking a mortgage via a bank, the broker can also advocate on your behalf, increasing your chances of success with the process.
The truth is that you won’t pay more through a broker and in fact, can often pay less. A broker isn’t paid more if the rate is higher, so it is in the broker’s interest to get the best deal possible for the client.
The Disadvantages of Using a Mortgage Broker
If you don’t have a solid understanding of the finance and mortgage industry, it can also be difficult to judge what is a good deal, or when you might do better visiting a local lender. Using a mortgage broker requires a bit of personal research and understanding, although it’s certainly possible to gain this information. the most common way to identify good mortgage brokers is by a friend or acquaintance who may have used that broker previously. Referrals are the best form of this, a broker that works for you will be referred many times over and will stand out among the hundreds of possible, “not so good brokers in the market, so listen and if you have not been referred… do your research on the company.
What Does a Bank Loan Offer?
Going through a bank loan officer can allow you to access a direct line to the very best deals at the bank or lender you choose to work with. Bank loan officers are also extensively experienced in working with the lender, their policies and their loans. They can answer any questions you might have about the loan or lending process, ensuring that you fully understand what you are taking on. Further, they can often structure a loan to work with other bank-provided products you have already.
Another advantage of going through a bank loan officer is dealing directly with your lender. This means any questions you have or any additional information the lender needs can be addressed without taking the time to go through an intermediary.
The Disadvantages of Using a Bank to Fund Your Mortgage
The disadvantages of sourcing your loan directly from a bank are at best related to limitation. A bank loan officer has access only to the loans offered by the bank or lender through which they are employed. This can seriously restrict the options available to those who are not a direct customer of the lender already.
So there are certainly pro’s and con’s to both. In the competitive market that is finance, I really think that getting two separate opinions, one from a broker and another from a bank and analysing the results and repayments can be a good way to go.
A home loan is one of the biggest financial commitments you will ever make, so it pays to take the time to make sure you get the right one for you.