Mortgage Broker Wollongong vs Bank- Which is The Best Option?
Finding the right mortgage is important if you are looking to buy a home. Unfortunately, navigating the home loan market can be difficult with the myriad of lenders available offering different products. While there are many ways to obtain a mortgage, the most common route is through a broker or a bank. Both banks and brokers can help you get a great rate on a home loan. Each choice has its pros and cons, and depending on your personality, you will have to decide which is right for you. To help you make an informed decision, here is an overview of the differences between a mortgage broker Wollongong and a bank.
Working With a Bank
Banks are more established institutions and hold the majority of the market when it comes to mortgages. That is because they lend directly to the customers so no need for a broker. Some banks will even advertise their mortgage options both online and offline to avoid dealing with brokers. As a result, most individuals looking to buy a home tend to head to their local bank first. If you are a regular customer, have a stable income, a great relationship with your local bank and good credit history, you are likely to get better terms as well as interest rates. A mortgage officer can match you to the best mortgage product available within that bank.
Advantages of Working With A Bank
Security – most borrowers tend to feel safer with banks because they are more established institutions and hold the largest part of the mortgage market in Australia.
Extra level of regulation – unlike mortgage brokers, under the Australian Prudential Regulatory Authority (APRA), banks have an extra level of regulation to ensure they meet all financial promises they make.
Deal directly with your lender– this means if you have any questions or there is additional information the bank needs, they can be addressed as first as possible because there is no intermediary.
No broker fees – the fact that you will be dealing directly with the loan officer means you don’t need to pay any broker fees immediately you get access to a mortgage. That helps you save money in the process.
If you have an already existing relationship with the bank and you hold your savings there, you may be eligible for discounts on interest rates.
Disadvantages of Working With a Bank
Limited Choice – banks only offer their own loan programs which can seriously restrict the options available especially to individuals who are not direct customers to that specific bank. They also don’t provide tailor-made products.
Banks are not obliged to disclose any commission they earn as well as the yield spread premium and you could also be easily overcharged.
Getting a mortgage with a bank can be a much lengthier and more bureaucratic process and in some cases, your loan application can be rejected for no good reasons.
Incompetence– there is always the risk that the loan officer you are working with is probably not trained in mortgages. As such, they may not know the mortgage market very well like brokers.
Working With a Mortgage Broker
A mortgage broker Wollongong is a middleman who may represent the loan products of many lenders. They do not lend the money themselves, but rather have access to the marketplace. Their main goal is to match borrowers with mortgage product that best suits their needs and at the best price.
Mortgage brokers often help clients with paperwork by ensuring that lenders process loan applications on time. Like most lenders, a mortgage broker will want to know if you are employed, the state of your personal credit history and available assets. Although banks do actually offer some discounting because of utilizing their services, you will discover that there are more benefits to working with a broker especially here in Australia.
Advantages of Working with a Mortgage Broker Wollongong
Extensive Knowledge – unlike most loan officers, mortgage brokers enjoy access to entire mortgage market. This, therefore, gives them an advantage at offering credible and solid advice because they are familiar with different investment objectives.
Access to many products – a broker has a panel of lenders hence many products to choose from. Consequently, they can easily have access to loan products that suits your needs and can get you terms that are otherwise difficult to obtain by yourself.
Saves you time – a mortgage broker Wollongong will shop around for the best deal for you thereby saving you the time you would need to spend chasing many lenders or applying for home loans that you don’t qualify for. They will also handle all the paperwork you would otherwise need to do yourself.
Offers unbiased and informed information -the fact that mortgage brokers are not aligned to one particular lender helps them provide unbiased information to their clients. Their obligation to exercise a duty of care is another reason they will never provide you with biased information.
Flexible to borrower’s needs – unlike banks, a mortgage broker Wollongong is more flexible when it comes to meeting the specific needs and requirements of different clients. They can provide great options for borrowers with bad credit or who don’t meet bank-lending criteria just because they are self-employed.
Personalised service – mortgage brokers have been known to offer a more personalized service compared to banks. They will help you through every step of the loan application, follow up the progress of your application and keep you well informed about everything, which may accelerate the approval process.
Competitive rate – brokers have a lot of negotiating power because of their immense experience in the extensive mortgage industry. Most of them will therefore often get you mortgages with lower interest rates than what your local bank is probably offering you.
Mortgage Broker vs Bank- Why Choose a Mortgage Broker?
The most common reason why most people choose to approach a bank instead of a broker is the fact that they already have accounts with them. Although it may be more convenient to apply for a mortgage with a bank where you have existing saving accounts, it does not necessarily mean that you will get a smooth loan application process. To top it all, borrowers who have bad credit or are not formally employed usually have trouble qualifying for loans with banks. They, therefore, choose to use the services of a mortgage broker Wollongong. So, why choose to work with a mortgage broker instead of a bank?
Clearly, the pros of using an expert broker outweigh those of using a bank. Given that banks are big institutions, they can be a lot slower in approving your loan applications and less personable because they have too many clients to deal with. Besides, they cannot provide some of the more tailored mortgage options that mortgage brokers can offer. Mortgage brokers, on the other hand, provide a personal touch. They will work hard to get your loan application approved as fast as possible so they can get their commission. Brokers can also provide guidance on the mortgage application, as they are experts in credit. They can offer a bird’s eye-view perspective into the market advising you on which lenders actually offer a reasonable deal given your prevailing circumstances.
Additionally, most mortgage brokers bring access to vast databases of information on available lenders, which allow them to research your loan options quickly and effectively. Also, a mortgage broker Wollongong can be contacted at any time to assist with any inquiries which is not the case with banks. Some will give you a direct phone number so you can reach out to them whenever necessary or visit them in their offices.