The Benefits of Using a Mortgage Broker vs. Going Direct to a Bank

In the journey towards homeownership, one of the most critical decisions you'll face is how to secure your mortgage: should you go directly to a bank, or enlist the expertise of a mortgage broker? This choice can significantly influence not only the deals you have access to but also the ease with which you navigate the often complex landscape of home financing.

With market conditions ever-evolving and the array of loan products growing by the day, making an informed choice has never been more important.

What is a mortgage broker, and what do they do?

In essence, a mortgage broker acts as a bridge between you and potential lenders. Unlike a bank, which offers its own mortgage products, a mortgage broker can access a wide range of loans from various lenders. This distinction means they can offer personalised service, tailoring their search to find a mortgage that best fits your unique financial situation and home-buying goals. Their role encompasses more than just finding you a loan; they provide expert guidance throughout the entire process, from initial loan comparison to application and settlement.

A significant yet often overlooked difference is that mortgage brokers are compensated only upon the successful settlement of your loan, unlike bank employees who receive a salary regardless of the loan's outcome. This arrangement naturally aligns a mortgage broker’s dedication with your goal of securing loan approval, ensuring they are committed to your success.

Let's delve into comparing the pros and cons each option presents so you can make an informed decision about what’s best for you:

01. Loan products and options

Mortgage Broker:

A Mortgage broker has access to multiple lenders, which can lead to better interest rates and loan terms

They can negotiate on the borrows behalf, finding and finetuning the best available option to you

Some brokers may not have access to the entire market or limited offerings, or only work with specific lenders. So it’s good to check your broker is well-connected in this space before working with them

The Banks:

Sometimes if you already have existing products with the bank, they might be able to offer you reduced fees or other benefits.

Banks are limited to their own products, which may not always off the best terms or rates available. But their interest is not to offer you the best, it’s to sell you their own products.

02. Personalised Service and Guidance

Mortgage Broker:

Mortgage brokers offer personalised advice, taking into consideration their client's entire financial situation, including their future goals and plans.

They offer support through the entire loan process, from pre-approval to closing

They’ll help you through all the paperwork, and necessary documents and help you find out if there are any potential schemes, grants or incentives that you could be eligible for

Their expertise and connections can lead to quicker pre-approvals and closings.

They are adept at finding solutions that cater to complex scenarios, which might be too challenging to handle without their specialised knowledge.

Not all mortgage brokers are created equal, the quality of the service depends on the broker. Find one that prioritises service, and has a proven track record and testimonials to back it up.

The Banks:

Direct communication can sometimes expedite approvals within the institution.

When dealing directly with a bank, you may benefit from a streamlined process, especially if you are an existing customer and meet all the standard criteria.

Can also be slower however if there is a high demand or the customer doesn’t meet standard criteria

You might have to deal with multiple or changing customer service representatives

Banks typically have fixed protocols that may not accommodate unique borrower circumstances, potentially leading to longer processing times or outright denials for those who do not fit the mould.

03. Loans for First Home Buyers

Mortgage Broker:

Brokers can provide invaluable guidance to first-time buyers, helping them navigate government incentives, grants, and favourable loan terms that they might otherwise miss.

They can compare various first home buyer programs across lenders to find the most beneficial deal.

The experience can vary depending on the broker’s familiarity with first home buyer incentives and their willingness to go the extra mile in assisting newcomers to real estate.

The Banks:

Some banks offer special rates or packages for first-time buyers, which can be more straightforward if the buyer meets the criteria.

Banks may not actively help clients to understand or take full advantage of available first-home buyer benefits beyond their own products.

04. Loans for Self-Employed & Small Business Owners

Mortgage Broker:

Brokers excel in handling non-standard income and documentation, making them a strong ally for self-employed or small business owner clients.

They often have experience in crafting compelling cases for why lenders should consider non-traditional income streams

The Banks:

Dealing directly with a bank might simplify the process for those who already have established business accounts or relationships.

Banks generally have stricter criteria for self-employed individuals, often requiring more extensive documentation and a longer history of income stability, which can be a significant hurdle.

Considerations and Making an Informed Choice Between a Mortgage Broker and a Bank

When deciding whether to go with a mortgage broker or directly to a bank, consider your personal needs, the complexity of your financial situation, and your comfort level with the home loan process. It really all does come down to what you value in a working relationship. Reflect on the importance of receiving personalised advice compared to the potential convenience of working with your existing bank.

Choosing the right pathway for securing your mortgage

As you consider your next steps in the property-buying journey, remember that the right guidance can make all the difference.

The IDEAL Financial team, with a proven track record over many years and an extensive lender network, understands both paths' nuances and can provide expert guidance tailored to your unique circumstances.

We firmly believe in creating long-lasting relationships with our clients, not just finding loans. So if you’d like some advice, we’re always here to help. Contact us today.

Contact Us

JADE WRIGHT

Accredited Mortgage Broker

0456 482 225
[email protected]
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Jade Wright is an accredited Finance Broker who always has her client’s best interests at heart. Well-known for her integrity and sincerity, she doesn’t miss a beat when it comes to organisation and communication.

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JASON SHERMAN

Accredited Mortgage Broker

0422 202 475
[email protected]

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Jason brings his experience as a customer, property owner and investor together with his knowledge of commercial banking to the table.

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