When you’re thinking about taking out a home loan, and you need to compare a banker vs a mortgage broker, you’ll notice that both have various benefits. You need to consider the pros and cons and determine which option is better suited to you. Which will best help you achieve your homeownership goals?
A good place to start is to ask yourself questions such as:
- Are you prepared to do your own research or do you want someone to guide you through the process?
- Are you self-employed and unlikely to be approved by standard lenders due to unconventional forms of income?
- Do you want to find the most suitable loan product?
To help you along the way, we’ve detailed all the things you need to know about getting off on the right track.
How Much Assistance Do You Need?
If you want to take out a home loan from a bank lender directly, you’ll have to do a lot of your own research. The lender will simply tell you the mortgage options they offer, which is just what that bank has to offer.
A bank lending specialist may assist with your application, but you’ll have to do most of the work. Lenders provide an array of services, so they generally lack specialised mortgage expertise—instead, they can only share knowledge regarding their own policies.
Mortgage brokers, on the other hand, are experts in home loans. As these professionals are highly trained and qualified, they can answer any questions, provide in-depth guidance on various mortgage options, and help you make an informed decision. This includes helping you compare the rates, fees, and features of different banks and non-bank mortgage lenders.
Meanwhile, a broker can guide you through every step of becoming a new homeowner, including the application process. The loan application can be finicky to navigate on your own, and mortgage brokers are very familiar with the affiliated lenders’ policies and home loan journey. They will handle the entire process from application to settlement by gathering your income documentation and any other paperwork you are required to submit.
More Service For Less Money
Mortgage brokers generally don’t charge their customers any fees. Instead are remunerated by the lender. Thus this service is free of charge to a consumer.
Financial institutions aren’t obliged to ensure that the interest rates they offer borrowers are competitive; mortgage brokers must legally operate under the Best Interests Duty. The Best Interest Duty demands that brokers act in the best interests of their clients when providing credit assistance, providing peace of mind, and knowing that they won’t get ripped off.
Do You Require a Variety of Home Loan Options?
Mortgage brokers can access various home loan options and interest rates from multiple lenders—sometimes as many as 40. Therefore, they can comb through the options from each credit provider and provide you with opportunities to best suit your financial situation and goals.
A bank loan officer is more limited in their suggestions because they can only offer borrowers their own products. A bigger financial institution will have numerous options for home loans to suit many borrowers, while smaller direct lenders may have fewer to choose from.
A professional working in the mortgage industry has the knowledge to recommend loan products tailored to your personal circumstances. For example, medical practitioners are eligible for a doctor home loan, and many other professionals may be eligible for specific discounts and deals simply due to their career position. These loan options often waive lenders’ mortgage insurance fees, saving borrowers thousands of dollars.
Remember, if you are doing your own research on lenders without going through a mortgage company, you can theoretically access any lender and any loan, significantly widening your options, but you have to do all the homework.
So, How Do You Choose?
In general, your unique circumstances—rather than whether you work through a mortgage broker or directly with a bank—will determine how easy it may be to get a home loan. If you have a sizable down payment saved up, a reliable source of income, a high credit score, and no history of defaults on payments or bankruptcies, you may be more appealing to lenders than someone without them. In this case, applying for a straightforward home loan without the assistance of a broker can be a simple process, you can easily do the research yourself, but you may not find products that brokers have access to. .
Take note that when doing your research, there’s a risk you could miss or misunderstand crucial information related to the policy. There’s a chance you might agree to unfavourable and expensive terms without realising it, like hidden or ongoing fees. A mortgage broker can reduce those risks by explaining things you don’t understand in layman’s terms.
A mortgage broker can also help you find lenders who will assist you if you have erratic income, a poor credit score, or a minimal deposit compared to the value of the home you’re buying.
When choosing the best mortgage broker, you need to ensure they are legit. They should be registered with the Australian Credit Licence and be part of the Finance Brokers Association of Australia (FBAA) or the Mortgage and Finance Association of Australia (MFAA).
Mortgage Brokers are Lending Specialists
At the end of the day, taking out a home loan from a bank directly is certainly doable if you meet the lending criteria. If you do the work to compare loans from different lenders and know which is the best solution to suit your needs, home-buying can be a straightforward process.
When buying your first home or investment property, it can be beneficial to seek professional advice from a good mortgage broker. Brokers work in the best interests of their clients and are legally obligated to provide all the details on the financial products available to them. If there’s a better deal with a specific lender, they’ll tell you, and if the interest rate is too high, they’ll suggest another option.
At The Mortgage Agency, we have mortgage brokers on hand who can connect you with many lenders and help you find the right loan for your home purchase. Our experts provide personalised services to meet your needs and goals, and will assist you through every step of the buying process.
If you’d like to get in touch with someone from our team, contact us today.
Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property buyers and investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal, tax or investment advice. You should, where necessary, seek your own advice for any legal, tax or investment issues raised in your affairs.