Are you shopping for a home loan right now and wondering if you would be better finding a mortgage broker or going directly to a bank for your loan?
Whether you are a first-time home buyer or a homeowner looking to refinance, your goal is likely to find the best rate and lowest fees for your loan.
Let’s look at your lending options.
Mortgage lender vs bank vs mortgage broker
A mortgage lender is a non-bank specialised lender that caters for special needs and circumstances. They are direct lenders, like banks, however they do not offer other financial services like credit cards or savings accounts.
This type of lender typically offers home purchase and refinance loans. They can be more flexible with “outside-the-box applicants” like those with lower credit scores or larger loan amounts.
A bank is a direct lender and is a financial institution that originates, processes and funds loans themselves. Banks these days offer a range of products and services including everyday transaction accounts, savings accounts, personal loans, business accounts and loans, debit and credit cards. Banking companies can also sometimes offer insurance and superannuation products.
A mortgage broker is an accredited professional that works for the customer to find them the best deal. A mortgage broker sources the best loan for you from banks and other financial institutions. They do not work for a bank and they generally do not charge the customer a fee for service.
Is it easier to get a mortgage with your own bank?
If you are refinancing with your existing bank and they are definitely the best deal out there, then the process can be fairly straight forward to get a mortgage with your own bank.
If you are a first-time home buyer, you will have to go through the same process as with any lender to get a mortgage from your bank. They will have your banking records but not much else needed for your application.
In order to compare your bank’s mortgage offerings with other home loan products by yourself, you will need to research the market and approach other banks and lenders directly for their products and best available offers.
The downside to going straight to your bank for your mortgage is they will not tell you what else is available from other lenders so you can compare properly and they sometimes will not even tell you what comparable offers they have available if you don’t ask the right questions.
Should I use a mortgage broker?
Mortgage brokers work with a variety of lenders and have many customers with a range of financial situations, which means they have access to a lot of information. They also have access to the most up-to-date products and rates available on the market.
You can go to one mortgage broker and compare multiple loan products. You have access to unbiased advice to help you understand interest rates, fees and all other details to help you find the best home loan for your situation and financial goals.
If the phrase “comparison rate” makes you go “huh?!”, mortgage brokers can help break down all the “loan language” so you know exactly what you are comparing when shopping for your loan.
When you need a loan like a home mortgage you are usually under pressure in other areas of your life finding the right property, making an offer and dealing with real estate agents. A mortgage broker can take the stress out of finding your finance so you can focus on finding the property of your dreams at the right price. A broker will negotiate with and liaise with lenders on your behalf and keep you informed every step of the way.
You can rest easy when you use a mortgage broker – mortgage brokers are governed by Best Interests Duty Legislation, which means they have to work in the best interests of the customer.
Talk to us today to access a range of lending options for your new loan.