Which is better for me – Mortgage Broker vs. Direct Lender?

If you are looking for a house and have found it, the next step is to secure a mortgage. For most people, especially for first-timers, securing a mortgage is stressful. Aside from gathering all the papers and documents reflecting your financial capacity, you have to figure out where to get a mortgage.

There are basically two options to fund your future home: you can go directly to a lender or bank, or you can seek the help of a mortgage broker. There are significant differences between the two. Continue reading to find out.

Why Should I Go To A Direct Lender?

A direct lender is one that offers a mortgage, like a bank or a financial company. You go directly to a bank and apply for a mortgage. For busy individuals, the process may consume so much time since you do all the processing. You check the rates of various banks and see which has a better rate compared to the other. Sometimes, you stick with the bank with which you have a good relationship with and stick to it, even though one bank or lender may have a lower interest rate. At the same time, after you submit your financial documents to the lender, you do the follow-up and you speak directly to the lender in case a problem comes up.

One of the benefits of going to a direct lender is that it could be easier to solve an issue that might come up in the future. Oftentimes, brokers are occupied with their many clients so they cannot immediately deal with your problem or could not readily prioritise your concerns.

For people who have been long-term depositors of a bank, it is more convenient for them to deal with their banks rather than find a mortgage broker. They find it more reliable to deal with bankers whom they already know rather than find a broker and trust that the broker deals with them openly.

On the other hand, you have to consider that if you go to a direct lender, the loans available to the latter is quite limited. This means that the products and package that may be offered to you will be limited only to what the lender offers. Also, consider the waiting time for your loan to be approved. Some take a month or more and if you are in a hurry, this may not work to your advantage.

Why Should I Go To A Mortgage Broker?

The biggest benefit of going to a broker is the fact that brokers are able to get various quotes from different lenders. So, instead of you shopping around for rates, you only have to speak to a mortgage broker and see what the options available to you are. There was a time when people were not really a fan of brokers but that has changed in the recent times. More and more people are securing the services of a broker because of the convenience that they offer. Mortgage brokers may represent several banks and lending institutions as opposed to direct lenders, which are considered as a single lending source.

Brokers act as a middleman between the borrower and the lender. This may be either an advantage or a disadvantage. Because brokers are dealing with many clients, it may also take a while before your loan gets approved, although this would entirely depend on the broker. If you are in a hurry, you should make this known to your broker so that he or she will prioritise your loan application on top of the others.

Many people think that mortgage brokers offer lower rates compared to direct lenders. Actually, the rates depend on what happens in the market, which means that every lender acquires the rate from the same place. Interest rates, in truth, may just be as competitive whether you choose to go to a direct lender or a mortgage broker. Of course, there may be small differences in the rates but you have to compare other factors as well when deciding whether to go to the bank directly or seek a broker.

Those who have a hard time borrowing from a bank often go to mortgage brokers. A broker can help you find a lender who will give you your financing needs and you need not do all the hard work. It is the broker who does it for you.

The Bottom Line

Whether you choose one or the other depends on what your needs are. Compare the rates being offered by a broker and your bank. In choosing brokers, make sure that you speak to two to three or more so you can determine which broker serves your best interest. If you get a recommendation for a mortgage broker and you don’t want to go through the hassle of doing all the paperwork, then a broker might be a better option.

When looking for a reputable broker, go to 1300HomeLoan. We are the largest and most respected mortgage brokering company in Australia. Our brokers are available in all capital cities and in most major regional cities.

Getting a mortgage need not be burdensome. Our brokers are always ready to assist you as well as offer financial planning advice, whether you are looking for a loan to purchase a new house, build, renovate, invest in property, or looking into the possibility of getting a mortgage in the future.

Our brokers are known for being trustworthy. They are licensed and are qualified to find you the best deals possible. Mortgage brokers affiliated with 1300HomeLoan have access to over 30 lenders nationwide. Checkout our Tools page to find a broker. You will be presented a list of brokers located in your area. Don’t forget to check their profiles and contact them through our website. You can also contact them directly in their given contact information.

For more information, you can call our customer service hotline at 1300 366 456 or send your queries at enquiries@null1300homeloan.au.


If you'd like to know more email us - enquiries@1300homeloan.com.au, or call 1300 466 356
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