Whether it’s your first house, your next house or an investment property, finding the right home loan product for you is crucial – from getting the best interest rate to finding a lender who understands your needs, there is a lot to consider. When deciding on a mortgage broker vs bank for helping you with your home loan, there are some key points you need to consider.
In this blog, we will delve into the mortgage broker vs. bank debate and how to best work with a mortgage broker to get a loan product that suits you.
Mortgage broker vs bank: who does what?
Are you still confused about a mortgage broker vs bank? That’s completely understandable, as (at surface level) they appear to achieve the same – getting you a loan for your home. But it goes much deeper than this, and some of these things may surprise you.
Here are some of the key considerations of each one’s role in your home-buying process.
What does a mortgage broker do?
Whether it’s your first home, your next home or an investment property, getting a mortgage broker onside can help you get into the property market – and your new home – sooner. Using a broker not only ensures you’re getting the best deal, but it dramatically simplifies the home-buying process.
When it comes to deciding on working with a mortgage broker or bank, it’s important to consider the following about mortgage brokers:
- Inovayt mortgage brokers have access to a significant number of lenders with hundreds of home loan products.
- We treat you like a person, not a number.
- We always work with your best interest in mind.
- Goals-based approach tailored to your financial situation.
- Services are often free of charge.
- Inovayt mortgage brokers manage your entire application process from start to finish.
- Inovayt mortgage brokers liaise directly with your solicitor or conveyance.
Check out our blog on ‘What does a mortgage broker do?‘
What does a bank do?
When looking to buy a house, many of us initially turn to our banks (particularly our current providers) to obtain a home loan. Unfortunately, while banks can offer you a good deal, they are limited to solely offering their product. They are trying to get your business and will do their best to sell you their product.
Before reaching out to your bank, it’s important to consider the following:
- Customers are often treated like numbers or transactions.
- Banks only offer one set of products and policies.
- Their needs come before yours.
- There is often long application processing wait times.
- Call centres and high turnover of staff.
- They don’t liaise with your conveyancer or solicitor.
- A lot of banks will require you to physically visit the branch to submit your application.
- Banks offer a range of services so don’t specialise in mortgages the way a broker does.
- Banks are not required to ensure that your interest rates are competitive.
What are the benefits of using a mortgage broker?
Using a mortgage broker means choosing a finance professional to work alongside you and guide you through the home-buying process from start to finish. Here are some of the key benefits of using a mortgage broker.
They work for you
Perhaps the most significant benefit of using a mortgage broker is enlisting the help of someone who is on your side. Although this might seem like a given, it’s important to note that they aren’t trying to sell you a product – mortgage brokers want to help you find the best loan to suit your needs.
As of January 1, 2021, the National Consumer Credit Protection Act states the following:
“Mortgage brokers must act in the best interests of consumers when providing credit assistance in relation to credit contracts.
Where there is a conflict of interest, mortgage brokers must give priority to consumers in providing credit assistance in relation to credit contracts.”
This legislation is called ‘Best Interest Duty’ or BID, which essentially means by law, mortgage brokers must act in the best interest of the consumers.
In contrast, the banks act in their own best interest as the product provider. Failure to do so can result in significant penalties.
The knowledge they possess
Mortgage brokers are experts in their field. They spend their days working with lenders and know exactly what’s happening in the world of finance. Their primary motivation is to empower you to make informed financial decisions to achieve your financial goals.
A good mortgage broker will:
- Analyse what you can afford to borrow.
- Assess and source an option that suits your situation.
- Clarify how the process works.
- Apply for the home loan on your behalf and manage it through to settlement.
Mortgage brokers work with people from a diverse range of backgrounds daily, giving them experience in various financial situations.
Their understanding of the home loan market
We briefly mentioned it above, but a mortgage broker’s 9-5 job is within the lending market. They understand the lending market better than anyone and have a complete overview of the market.
In contrast, a bank is a faceless entity working to sell you its product. While this product may suit you, it’s important to note that a bank won’t offer you deals from other lenders and may not even offer you their best deal. A mortgage broker advocates and negotiates on your behalf to find the best rate for you.
Lastly, a mortgage broker goes past a transactional relationship. They go beyond to help you build a strategy to achieve your goals. When you enlist the help of a mortgage broker, they do much more than help you get a home loan. A mortgage broker will help you define your short–and long–term financial goals and find you a home loan that puts you on track to achieve these goals.
An Inovayt mortgage broker is your ally throughout the entire home-buying process. While other lenders often only appear when trying to sell you their product, we are in your corner throughout the whole process. From the initial discovery meeting to the settlement of your home, your broker will continuously check in with you and keep you updated on where they are with your loan application.
They also share their knowledge with you so you can make informed financial decisions in the future.
Do brokers charge fees?
One of the questions we get asked all of the time is one of the reasons people sometimes don’t reach out to a mortgage broker, and that is fees. While it varies from lender to lender, many mortgage brokers don’t charge a fee for their service as the lenders pay them a commission for the loans they acquire. If you choose to go through a lender, they often have their own fees associated with this, so it’s best to discuss it with a mortgage broker.
Mortgage broker vs bank
When it comes down to a mortgage broker vs bank, there’s no right or wrong answer. However, enlisting the help of a mortgage broker means you’re giving yourself the best chance of securing a competitive home loan.
If you’re looking to buy your first home, your next home or an investment property, get in contact with an expert Inovayt mortgage broker today.