Monday 14th March 2016What Is Better For Me – Mortgage Broker vs. Bank?
When you are in the hunt for a mortgage, you can have two options – use a mortgage broker or deal with the bank directly. Accordingly, there is a large percentage that goes straight to the nearest bank when they are looking to apply for a loan. Based on some finance experts, you may be missing out on some important benefits if you do this. Whether you choose to go to the bank or choose a mortgage broker, each choice has its advantages or disadvantages and depending on what you are looking for, you will have to decide which the better choice is for you.
A broker acts as a middleman. What brokers do is that they work with various lenders to find loans for clients. Brokers are the ones who negotiate with banks and other financing institutions in behalf of the borrower. It is not the brokers who lend out the money directly but the banks or other lenders. Brokers are not connected with any one lender and because of this, they can shop around in representation of their clients. This is very important for borrowers who have no experience and who do not have the time to shop around. Borrowers may save time if they go for experienced brokers who shop around for the best mortgage deal.
Another reason to get a mortgage broker is the fact that brokers are the ones who interact with lenders and do the paperwork. Since they are experienced in this type of job, they are able to head off possible problems related to borrowing. They look at your information before they submit it to the lender and since they know and understand the guidelines of the lender, they would tell you ahead what documents are needed or if your documents are lacking.
The biggest advantage if you are going to a broker is choice. When you deal with a mortgage broker, you are actually selecting from at least 10 banks and over 50 products versus sitting in front of a banker who can only offer the bank’s products. This is especially important these days since it is a common knowledge that banks are more likely to turn down borrowers who do not meet their requirements.
On the other hand, you have to keep in mind that mortgage brokers charge fees, which typically range from 1% to 2% of the mortgage. When you decide to deal with a broker, consider who pays the broker’s fee. There are mortgage brokers that receive payment from the lender but there are also those that charge substantial fees to the borrower.
Furthermore, you have to be careful when choosing a broker. Make sure that the broker of your choice is licensed and that he or she has your best interests in his or her mind.
Mortgage lenders have the power of control; they are the ones who make the decisions. They can easily turn you down and you have nowhere to go. Those who have developed a long-term relationship with a bank may find themselves in a favourable situation, since the bank may offer terms that are advantageous to the borrower. There are also banks jumbo loans or those that exceed the conforming loan limit, and this is available only through a bank.
It is a common knowledge that the secondary market for mortgages has manifestly reduced these days, which means that more of the mortgage products are only made available through banks.
Moreover, banks lend out their own money and this can be a double-edged sword. This could mean access to lower or higher rates. If you have a good credit standing, a long-term customer of the bank, and have a stable source of income, it is most likely that you would find a good rate through your bank. A loan officer can help you find the best loan product available in the bank.
When you go to a bank, you will find that its officers are highly knowledgeable when it comes to their loan policies. They can answer any questions about the lending process. Furthermore, they can structure a loan that could work with other bank-provided products that you already have with the bank.
Before deciding, it is important for borrowers to compare what the banks and the brokers offer. You have to meet up with at least two or three mortgage sources and look at what they offer, such as the interest rates, lock-in fees, and points on the spreadsheet. Meanwhile, if you want to go alone, it would be more advantageous to deal with the bank directly, especially if you are a regular customer and have developed a good relationship with the bank.
Consequently, if you don’t have a good working relationship, shopping around would be the appropriate choice. You can go to the bank and contact as well a mortgage broker. Then compare notes. Furthermore, do not be afraid to ask questions. The more you ask, the better you know. Do some research so that you have a background as to how the mortgage process works. This way, you can also ask questions and seek explanations from the bank or the mortgage broker.
If you are looking for a reputable mortgage broker, consider 1300HomeLoan, one of Australia’s largest, fastest growing, and highly reputable mortgage broking companies. Our services are available in all capital cities of Sydney, Melbourne, Brisbane, Perth, and Adelaide as well as in most major regional cities. Our mortgage brokers are available online and can assist even in all rural and remote areas of Australia.
Over the years, we have helped various individuals in finding the right funding for their loans. We have access to over 30 different lenders, whether banks or non-bank institutions who can offer a more aggressive product solution. Whether you are looking to finance a new home, refinancing, or investing, do not hesitate to contact us today on 1300 466 356 or via our website. Our consultation is free of charge.