Should I Choose a Mortgage Broker or a Bank for My Loan? Pros & Cons

Applying for a loan – either for your first home, an investment property, or a business – is not as simple as handing over a piece of paper and providing a few facts about yourself.

When it comes to applying for a loan, things get complicated. In fact, loan processes start well before you apply for a loan and extend well after it settles, loans require specific standards to satisfy, numerous documents to acquire, and credentials to establish.

But depending on your specific situation, your application process may be handled more efficiently by utilising a bank or a mortgage broker. Both handle the loan processes differently, so ultimately a bank might be more beneficial than a mortgage broker under certain circumstances.

When deciding between a mortgage broker and a bank, the real question you must ask yourself is, which route will be more beneficial for me in the long run? Which will give me the best opportunities in the future? So let’s look at the benefits and drawbacks of a mortgage broker and a bank, so you can find out which alternative is best for you.

Going Direct to a Bank for Your Loan: Pros

Most Aussies who deal directly with a bank for their loan applications do so because banks are more familiar to them rather than mortgage broker. Since most people understand how banks function and how to contact banks.

Specifically, if someone already has an account with a certain bank, they may find this to be the more convenient and straightforward option. In fact, staying with your established bank may work to your advantage if you have a strong credit history and are in a stable financial condition, as banks are more likely to provide a decent rate to consumers like you.

Furthermore, if you’ve been dealing with your bank for some time, you’ve probably built a great level of trust with the institution, and equally, you are happy with the level of service they deliver. Trust and satisfaction can go a long way, especially when it comes to a large financial transaction like purchasing a home or funding a business.

Banks might also provide you with various package discounts on the bank’s other products, such as credit cards and savings accounts. In addition, your bank may set up automatic payments from your bank account to your home loan making repayments more manageable.

Going Direct to a Bank for Your Loan: Cons

Although the bank may appear to be a good option because you already have established trust and satisfaction within your current account, but the major drawback is that banks can only provide you with their own set of loans. This means you’re limited in your choices and might be losing out on a better offer from a different lender.

Additionally, if you have a unique work position, such as being self-employed, or if you have a bad credit history, your chances of having a loan authorised by a bank are significantly reduced. You’ll be better off working with a specialist lender who specialises in mortgages for high-risk customers in this scenario.

Plus, banks can take a longer time to process your applications since not everyone who works for the bank is a credit expert. In contrast, mortgage brokers know everything there is to know about dealing with such loan applications and efficiently speed up the processes.

Remember, when dealing with a bank directly, they have the right to refuse you! As your loan process grows lengthier and more repetitious, this might become aggravating. Don’t lose time; chat with a Mortgage Broker who can provide you with more alternatives than your bank can.

Choosing a Mortgage Broker for Your Loan: Pros

Unlike bank employees, a mortgage broker will already be aware of everything that must be prepared, processed, and completed to apply for your loan.

So, instead of travelling back and forth with a bank, all you have to do is provide the requested information, prepare or obtain assistance with preparing all required documents, and then leave the rest to the mortgage broker to be approved.

Then, based on a mortgage broker’s expert preparation and experience, they can quickly choose the appropriate lender for you and get you approved in as little as a few days! An incredibly stress-free process.

Thus, a mortgage broker will save you a lot of time and effort, especially if this is your first time applying for a loan, which can be rather irritating.

Choosing a Mortgage Broker for Your Loan: Cons

Although, of course, there are some negatives to choosing a mortgage broker. For example, lenders frequently pay mortgage brokers a commission, and since certain home loans pay a greater commission than others, this might lead to possible conflicts of interest.

In addition, the qualifications and experience of mortgage brokers differ as well. However, due to the vast number of mortgage brokers accessible, it might be challenging to evaluate which ones have the greatest credentials to assist you. So, it pays to do your homework before agreeing to work with a mortgage broker.

To find the best possible mortgage broker for you, here are some considerations you should ask a mortgage broker to get a sense of their credentials and skills:

• Are you registered with the Australian Securities and Investments Commission (ASIC)?
• How long have you been a mortgage broker in the industry?
• Which lenders do you work with?
• Why did you decide to cooperate with these financial institutions?
• How much do you charge in fees and commissions?
• What types of loans do you provide?
• How would you assist me in finding the best house loan?
• What method do you use to compare interest rates?
• Do you have any additional clientele with whom I might speak?

Conclusion: Why Choose a Mortgage Broker Over a Bank?

Even if you already have an account with a bank, many consumers prefer mortgage brokers over banks. This is because mortgage brokers want to discover the quickest route, the most straightforward procedures, and the most outstanding options for their clients, which puts you in a situation where all you have to do is produce primary papers and information.

Thus, ensuring you have the greatest alternatives, the best chance of being accepted and save a lot of time in the process.

So, ready to find your perfect Mortgage Broker in Australia? Get in touch with your local mortgage broker and see their reviews to ensure they are reputable and reliable.