While the ‘mortgage broker vs bank’ conundrum is an age-old debate that isn’t going away anytime soon, it’s important to understand their key differences.
Since purchasing a home is generally not an everyday purchase for the average Australian, obtaining finance is arguably the biggest hurdle that a prospective homeowner has to face. Unless the buyer in question has recently won the lottery, this usually means taking a trip to the bank in the hopes of obtaining a home loan.
However, that process has changed in recent years, with the services of a mortgage broker now providing an alternative to the traditional bricks and mortar lending providers. While the two industries certainly have more similarities than differences, what’s the better choice when comparing a mortgage broker vs bank?
Comparing Mortgage Brokers And Banks For Finance
Australians have a reputation for being loyal creatures, so it should come as no surprise that the first stop for many prospective homeowners is a trip to their everyday banking institute. Approaching a bank for a home loan can work to your advantage if you have a good credit history and if you are in a stable financial situation, as banks big and small will often deem you to be an ideal loan candidate and the type of person they want to do business with.
Unfortunately, what this process also translates to is that buyers only receive information about their specific bank’s range of products – which ultimately may not be the most suitable fit for them. In addition, self employed applicants, sole income households, applicants with smaller deposits and even someone who missed a phone bill payment in 2016 may have a much harder time getting approved for a home loan when applying directly through a bank. For a growing number of Aussies, partnering with a mortgage broker provides a solution.
In simple terms, the role of a mortgage broker is to act as an intermediary, or someone who navigates home loan products and their applicable 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.
When comparing a mortgage broker vs bank, it’s important to remember that their key point of difference is that a mortgage broker has access to a wide variety of home loan options, and it is quite literally their job to find you the best match to suit your individual circumstances – they work for you, and not the banks.
Even applicants with a spotless credit history and strong “on paper” credentials can benefit from the services of a mortgage broker, as they’re able to help customers explore all the options. In addition, “packaging” your application is where a mortgage broker really shines. There is never a one size fits all approach with a mortgage broker, as they know what works and what doesn’t, and how it varies between each lending provider.
Trying to juggle work, social and home life around bank appointments has the potential to add extra stress to a home loan application. Mortgage brokers are all too aware of this, and instead apply a level of flexibility when it comes to ensuring that they’re on call and available for their clients, even if that means outside of business hours. This is often a wildly different approach to what consumers can expect from a bank, and the added convenience of only having to submit one set of documents also helps to push mortgage brokers as the ideal choice between the two.
However, 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 renowned for rewarding loyalty. If you partner with a reputable mortgage broker with the right credentials, it’s not uncommon to keep them in your finance arsenal for future transactions, as they’re already familiar with your personal circumstances and long term goals.
As of September 2021, mortgage brokers wrote 67% of all residential home loans in Australia – the highest number ever recorded. 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 and over two thirds of the nation’s home buyers are using the services of a mortgage broker, the winner of the debate between mortgage broker vs bank is pretty clear.
Partnering With Home Loan Professionals
Navigating the complex world of home loans has long been regarded as stressful, frustrating and time consuming – but if you can find the right advice on sourcing how mortgages work, then the good news is that it doesn’t have to be.
Since their inception in 2012, the team at Madd Loans have worked tirelessly in providing over 2,000 Queenslanders with finance options to help turn their dreams into reality. With the entire brand being built on referrals, owner George Samios takes great pride in making the loan process both fun, educational and stress free – and he has a swag of awards to prove it.
If thinking about your financial future strikes a chord with you, then it might be time to speak to a professional. Whether you’re chasing mortgage solutions or a financial fairy godmother, the team at Madd work together as a collective to turn your goals into reality.