When home buyers think about finance to purchase a property, they have a choice between a mortgage broker or going to banks directly. I am a big advocate of mortgage brokers – not because I am one but because a good broker can help you build wealth through your property portfolio.
Mobile lenders or employees who work for the bank are employees and get paid anyway and may move from one lender to another.
So here are the advantages & disadvantages of using mortgage brokers for your home loan.
Advantage #1: Saves you Legwork
On average, mortgage brokers have around 25 to 30 different lenders on their panel. In terms of the number of loans, this means there are nearly 1000 plus home loan products. If you were to research each lender and their different loan options, you can spend days on end, trying to figure out which one to choose. Besides, you may not even know the names of certain lenders who have really good home loan products.
A mortgage broker can also steer you away from certain lenders who are not so easy to deal with.
Advantage #2: Saves you time
Mortgage brokers not only help you choose the right home loan, they also help you save time by filling out paperwork and liaising with your lender and other parties involved, from application to loan settlement and after.
On average, it can take anywhere between 2-10 hours or more from application to settlement to get your home loan approved. By using a mortgage broker, you don’t need to take valuable time out of your day to get your home loan approval.
Advantage #3: Wide panel of lender access
Some lenders work exclusively with mortgage brokers and rely on them to bring suitable business to the bank. You may not be able to call these lenders directly to get a home loan. Brokers may also be able to get special discounts from lenders due to the volume of business generated than you can get on your own.
Advantage #4: You may save some fees
There are different types of fees that are involved when you take up a home loan including application fees, legal fees, settlement fees, ongoing fees, valuation fees and LMI. Mortgage brokers can help you navigate through this maze and help you either choose loans with minimal/no fees or negotiate with lenders to get some of the fees waived which can save you 1000s of dollars.
Advantage #5: Customer Service
Most mortgage brokers are business owners and hence want to keep clients for the long term. Bank employees get paid at the end of the day whether they do justice or not and hence good mortgage brokers really take care of clients to provide excellent customer service.
Disadvantage #1: Broker’s interests may not be the same as you interest
Your ultimate goal with a mortgage is to get a loan with a low interest rate and fees and aim to pay it off quickly, not having the loan for a 30 year term offered by the lenders. Sometimes, mortgage brokers may suggest lenders who pay them extra commissions or because they need to meet volume requirements.
Disadvantage #2: Some lenders do not work with mortgage brokers
There are a few lenders who do not offer loans through mortgage brokers. Since GFC, there are a few lenders who have come back to offer loans through mortgage brokers. If you want a home loan from a very specific lender not on the broker’s panel of lenders, you may have to approach them directly.
Disadvantage #3: Not doing their due diligence
A majority of brokers are comfortable using 3-4 lenders on a regular basis whose policy they are familiar with. So, even though they have 25+ lenders on their panel, they actually don’t use the full range to check suitable options for clients – which means you may miss out on a good deal.
In conclusion, mortgage brokers are able to find you a suitable loan, but check out the person to see if he/she is the right person to help you. Work with a reliable mortgage broker with solid references and you should be able to secure the loan of your dreams.