How to get home loans: Mortgage brokers vs. banks or lenders?

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According to the Review of Mortgage Broker Remuneration conducted by the Australian Securities and Investments Commission’s (ASIC) in 2017, it was concluded that about 54% of home loans were issued via mortgage brokers. The Australian Transaction Reports and Analysis Centre (AUSTRAC) is also expecting a growth of 9.6% in mortgage lending from 2019 to 2024.

All these official figures suggest that mortgage brokers are increasingly important in the financial and mortgage industry. In this article, we will walk through the benefits and drawbacks of getting home loans via:

  • Mortgage brokers
  • Banks
  • Lenders

Mortgage brokers

Why talk to mortgage brokers?
Mortgage brokers have a wider connection in the financial and mortgage industry, making them fully capable of synthesising information from diverse sources. They act as a middleman and/or gatekeeper between homebuyers and lenders. Leveraging on their expertise, mortgage brokers can introduce you to a variety of financial products depending on your requirements.

Different from either the banks or non-bank financiers, the role of mortgage brokers is not to provide you with home loans, but to provide you with different options of home loans and help you to get your dream property as smoothly as possible.

Benefits and drawbacks:
One of the benefits of using a mortgage broker is that you might be able to obtain a special interest rate and waive some miscellaneous fees from the banks. This is a result of the mortgage brokers negotiation power to negotiate a lower rate with lenders and banks as they usually have a bigger customer base. However, this advantage can be lessened if you need to pay for the mortgage services.

If you are looking for a reliable mortgage broker who provides free consultations, contact us today!

Banks

Why talk to banks?
It's easy to understand why you, as a homebuyer, would want to consult a bank for home loans. It's effortless, the possibility is that you already have an existing relationship with the bank. Banks can readily offer you more appropriate financial advice and products based on your previous financial records with the bank.

Benefits and drawbacks:
Furthermore, banks are perceived to be more established and reliable, especially during economic crises. However, banks are only capable of evaluating and promoting their in-house financial products and services to you. You might need to do some extra work to gather financial information from different banks, which is very time-consuming.

At times like this, mortgage brokers like us can be helpful in consolidating financial information from different sources.

Lenders

How are lenders different from banks?
Apart from banks, you have an additional option of consulting a non-bank financial institution (NBFI) such as a lender to get home loans. Similar to banks, these institutions are financially secured institutions that comply with the necessary Australian rules and regulations.

The only difference? They are not an authorised deposit institution (ADI), which means they obtain their own funding and loan them out to customers.

Benefits and drawbacks:
Lenders are able to loan homebuyers at a lower interest rate as they have a bigger margin to work on. These lenders are typically smaller in size - when compared to a bank, hence they can be faster in processing home loans applications, more flexible and willing to provide home loans to self-employed buyers or homebuyers with fluctuating credit histories. However, similarly to banks, lenders can only introduce you to the financial products they offer.

There are many lenders in the financial market offering a wide range of home loan options for potential home buyers like you. If you are still wondering which suits you the best, try using a mortgage broker to help you.

What Now?

In short, banks and lenders are the ones who could provide you with the necessary funding to purchase properties while mortgage brokers like Benevolence Financial Group help you to consolidate a vast amount of home loans information available in the market.

Looking for a trustworthy mortgage broker to help you can be a long and painstaking process, but worry not, we are here to offer our knowledge in the industry to you at absolutely zero cost. As ethical mortgage brokers, we are committed to helping you in getting home loans approved faster and easier without burdening you.

Contact us for a free consultation today!

Disclaimer: The information provided is general in nature and does not constitute financial advice. Please speak to us for recommendations on your individual circumstance and requirements.

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