When it comes to the realms of finance and buying property, what’s right for you – bank vs broker? Firstly, you’ll need to understand the key differences.
As of 2019, 6 in 10 Australians used a mortgage broker to assist them in acquiring a home loan to purchase property. What’s more, is that 90% of these customers reported that they were happy with the services provided to them. If the feedback is that good, then why aren’t more Aussies using one?
It’s no secret that banking is big business, and there are many lending providers to choose from – perhaps, too many. Since purchasing a home is not generally an everyday purchase for most Australians, navigating the many options can be overwhelming, which is why many stick with their everyday banking provider instead of taking the leap to explore other options when it comes to finance for a property. Sometimes it’s all just a bit too hard, but when it comes to determining whether a bank vs broker is right for you, what do you need to know?
What Are The Key Differences Between A Bank Vs Broker?
One common reason that consumers stick with a bank that they’ve used all of their life is security – after all, they’re unlikely to go bust anytime soon. The thing is though, banks are not obliged to ensure that your interest rates are competitive, and are generally not renown for rewarding loyalty.
In comparison, a mortgage broker acts as an intermediary who brokers mortgage loans and terms on behalf of individuals or businesses. They serve as the “middleman” between the lender and the borrower, and handle the time-consuming process of securing the loan and gathering the considerable paperwork involved. Traditionally, banks and other lending institutions have only sold their own products to consumers. However, as the market for mortgages has become increasingly competitive, demand for mortgage brokers have soared – but how exactly do they differ from the big banks?
Assessment – When assessing things like your documentation and payslips, mortgage brokers will look at your home loan application and work out a favourable outcome. In comparison, credit officers on behalf of a bank may misinterpret your documents, as they don’t understand how to assess your income or situation accurately.
Specialists – Mortgage brokers know the home loan process and lending policies of the lenders they work with, making them the experts within their field. As banks offer an array of services, they lack mortgage expertise and only have knowledge that extends to their own lending policy, making them inflexible.
Options – Brokers have access to a wide variety of home loan options and interest rate options, and are primarily concerned with matching you with a loan that best fits your individual situation. As banks can only offer their own loan products, if you don’t fit their lending criteria, then expect to be declined for a home loan.
Convenience – One of the most attractive features associated with using a mortgage broker is that they handle a great deal of the “leg work” for you when it comes to documentation and communication. While banks do have online application options, most of them will still require you to physically visit the branch to submit documents.
Interest Rates – Most mortgage brokers have annual or bi-annual “loan check ups” with their clients, which allow them to review your home loan at regular intervals to ensure you’re still getting competitive rates on your mortgage. In comparison, banks are not obliged to ensure that your interest rates are competitive, and will likely never give you a better deal unless prompted.
Sourcing Further Advice On Choosing A Bank Vs Broker
A completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire and Ambulance personnel and their families right across Victoria.
Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants, and aim to provide tangible real estate advice to those in stressful positions with crazy hours at no extra cost to them. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.
If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality or call Luke directly on 0414 757 705.
