Should you go to a broker or directly to a lender?
This is the first question that might come to your mind when you decide to look for a mortgage. We have looked into the market trends in Australia and as per research over 70% of Australians choose brokers to get their loans. That means currently more than 2 out of 3 loans are done by brokers and the number of people choosing brokers over directly going to a lender for their mortgage is increasing every year.
Why are brokers preferred?
Now let us have a look at why there is an increased popularity of brokers over the years. Arranging a loan is a huge undertaking and involves various paperwork.
The simple answer is the overall personalised experience you get from brokers in the process, which can be daunting, and confusing, to say the least. As per research and knowledge of brokers in the industry, many have an average industry experience of over 10+ years and cater for over 50+ lenders and over 100+ products.
How can a broker help you?
A broker plays an important role in the whole process from needs analysis to submission to settlement. The process depends upon your financial needs and the bank’s requirement, look at how a broker can help:
- A mortgage broker collects all the information with a view of understanding your requirements, and analyses the information to suit the best products and banks as per requirements of the customer.
- After analysing they will provide you with information on various lenders and their rates to you to choose from. You can decide on which lender you want to go with for your loan and the mortgage broker will help you with the lending process.
- A mortgage broker’s job is to carry out all the legwork on your behalf from start to finish and be a middle negotiator with banks as per need.
Mortgage brokers generally work for themselves, and do not charge any fees for their services. Their best interest lies in getting loans settled with the best rates they can offer from various lenders.
As we had a look at the role of a broker in securing a loan now let us have a look at the benefits and drawbacks of engaging a mortgage broker in your lending process or directly going to a lender or a bank for your loan.
Benefits of choosing a broker:
- A mortgage broker is like a one-stop-shop. They have access to over 50+ lenders including banks and non-bank small lenders, which are otherwise not available online and can get the best rates for you.
- A mortgage broker understands your needs and will tailor a loan according to your requirement.
- Mortgage brokers are locals, so they understand the local market trend and they are easier to approach.
- Mortgage brokers are experienced with various lenders, products and are up to date with current requirements. A mortgage broker will do all the paperwork for you after collecting your documents.
- If you are in a hurry to get a loan it might be best to approach a broker as they often know which lender can process the loan faster.
- You don’t have to pay fees to mortgage brokers, the bank will pay the brokers for the loan offered to you.
- A broker’s job is to provide ongoing service to you until the loan ends.
For more info on how to pick the right broker for your situation, read our article on How To Pick The Right Broker For Your Mortgage Dilemma.
Drawbacks of choosing a broker:
- Some banks don’t use third-party or brokers.
- Smaller brokers may not have access to all lenders and resources for ongoing services propositions.
- Some direct deals or products are not provided by banks to brokers.
Benefits of choosing a bank:
- If you are an existing customer with a bank, then the bank can often structure a loan to work with other products offered by the bank to create a package deal.
- Another benefit of going to a bank directly is reducing the intermediary time.
- Ongoing services proposition is more practical and relationship with existing bank.
Drawbacks of choosing a bank:
- The banks will only inform you about their offers, and you won’t know the best offers in the market.
- Generally, the bank won’t do the paperwork and you will need to do them on your own.
- In banks, you might not have a dedicated contact person if you have queries related to your loan and generally are dealing with call centres.
- If you are in a hurry to get a loan it might not be possible sometimes as banks might have backlogs and they won’t process your file on a priority basis.
- Some lenders will have limited options for complex, self-employed or non-confirming deals.
Which is better for me?
Going to a bank directly or approaching a mortgage broker is a personal choice. However, applying for a loan is stressful and it involves lots of paperwork.
It is a good idea to take advice from an experienced person or a professional, to make the process smoother for you. It is suggested to speak to lenders and brokers before making a decision.
Credit Hub is a leader in the market with over 20 years of experience in the industry. If you want us to help you through your home loan journey and obtain more than just a great finance package, then call Aman Singh at 0412175700 from Credit Hub Australia now to discuss your requirements. You can also talk to our team at 1300 782 944 or send us a note at Info@credithub.com.au. Alternatively, you may also visit our website https://www.credithub.com.au/
For any inquiries on your mortgage, get in touch with our friendly team through our Contact Us page.