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Mortgage Broker Vs Bank: Check Advantages And Disadvantages

Mortgage Broker Vs Bank

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If you’re looking to apply for a home loan or refinance an existing one, you’ll have to make several important decisions, including using a mortgage broker or a bank. Buyers usually have two options: applying directly with the bank or using a mortgage broker to compare products from different lenders.

Although the end goal is the same, the method and person you choose to apply for your loan with can significantly affect the final rates and benefits you receive. Continue reading this article to see which one is better for you Mortage Broker or Bank.

About 70% of new home loans in Australia are arranged through brokers, indicating that many people find this option advantageous.

What is the role of a mortgage broker?

What is the role of a mortgage broker

A mortgage broker is a financial expert who assists people looking for home loans by suggesting suitable options from various lenders.

They begin by understanding the borrower’s financial situation and goals, providing information on the amount they can borrow based on their deposit and other factors.

The broker explains the different types of loans, features, costs, and terms and conditions, including whether they need to pay for mortgage insurance.

The broker presents a range of home loan options from different lenders based on the client’s requirements. Brokers also guide credit policies and suggest lenders with the best chances of approval.

They submit the home loan application to the lender on behalf of the borrower.

What is the role of a Bank?

Financial institutions like Banks issue home loans and other credit products directly to borrowers. They provide various home loan products aimed at different types of borrowers, such as first-home buyers and property investors.

Banks determine the interest rates and fees for their products. They accept home loan applications from borrowers and mortgage brokers, assess the borrower’s financial situation, and approve or reject the application.

After approval, banks provide the funds for the borrower to purchase the property and manage the home loan and repayments. They also offer additional services to borrowers, such as mobile apps and offset accounts.

What are the advantages & disadvantages of using a mortgage broker?

Advantages

A broker can offer valuable insight into the housing loan market and has access to a range of loan options provided by different lenders. They can help you navigate the intricacies of applying for a home loan. Moreover, if your situation is unconventional, like a low credit score or self-employment, a broker can help you find the right home loan.

Disadvantages

It’s important to note that brokers may only have access to some loans available. This means there could be better deals they may need to be made aware of. While brokers are legally obligated to act in your best interests, they receive commission payments that could influence their recommendations towards a particular bank or lender.

What are the advantages & disadvantages of going to the bank directly?

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Advantages

Consider using a mortgage broker for a home loan, but remember that some lenders may have better options. Stick with your current lender for refinancing and ask for a favourable rate. Banks and lenders are more knowledgeable about home loans than brokers.

Disadvantages

Navigating the home loan market can be overwhelming due to the variety of options from different providers. With a broker, it can be easier to determine if you are genuinely receiving the best deal.

Banks often have slow internal processes for loan applications, but a broker may know shortcuts and efficient lenders. Sometimes, a lender may have an appealing offer but may not be willing to work with you based on your financial situation.

In this case, a broker may suggest alternative lenders that could save you time and result in a better outcome for your loan application.

Paying fees to the mortgage broker vs bank.

When deciding between a broker or a bank for your home loan, factoring in fees is essential. The good news is that using a broker typically will cost less than going through a bank.

Do brokers charge fees?

Borrowers typically don’t have to pay any additional fees when using a mortgage broker. The broker earns their compensation through a commission from the lender when they refer a client to them. However, it is essential to note that standard home loan fees, such as application and ongoing fees, will still apply whether you apply directly with the bank or through a broker.

Are brokers more secure than banks?

Are brokers more secure than banks

Banks and mortgage brokers in Australia are subject to strict regulations and must hold an Australian credit licence. This provides borrowers with ample protection, regardless of which option they choose. Although some borrowers prefer to work with a broker for their industry expertise, it is not a requirement.

We have provided a breakdown of the advantages and disadvantages of which is better for you, a mortgage broker vs bank, to assist you in making an informed decision. There is no right or wrong choice to make.

At the same time, a broker can simplify the mortgage process. On the other hand, going through the process yourself can be more time-consuming, but it may lead to a good deal if you find the right loan and lender.

If you go directly to a bank or use a mortgage broker for your home loan, it’s important to consider all the advantages and disadvantages. Take the time to research and compare your options to make an informed decision that suits your needs and financial situation. If you want a professional mortgage broker contact What If We Finance. We will make the process simplify and save you money. Click here to know more about us or find us here.

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